Deal highlights:
Issuer: Province of Ontario
Size: CAD1 billion
Maturity: 7 years; 05 February 2025
Coupon: 2.65%
Use of proceeds: Clean transportation; climate adaptation and resilience; energy efficiency and conservation; clean energy and technology; forestry, agriculture and land management
External review: Cicero
Lead managers: Bank of America Merrill Lynch; BMO Capital Markets; HSBC; RBC Capital Markets; TD Securities
Credit rating: Moody's (Aa2); S&P Global (A+); DBRS (AA low); Fitch (AA-)
Other highlights: the largest issuer of Canadian dollar green bonds
The Province of Ontario is the largest issuer of Canadian dollar green bonds, having raised a total of CAD3.05 billion ($2.27 billion).
It issued its inaugural green bond in 2014, and its fourth and largest offering in 2018, worth CAD1 billion.
The total order book size for its 2018 deal was in excess of CAD$1.6 billion.
Domestic Canadian investors showed largest demand (75%), followed by American investors (15%), European, Middle East & African investors (7%) and investors from Asia Pacific (3%).
Investors with green mandates and/or Principles for Responsible Investing signatories represented over 85% of overall sales.
Ontario's green bond framework aligns with Ontario's Environment Plan and received a second opinion from Cicero.
It finances clean transportation, energy efficiency and clean energy projects, among others, and excludes fossil fuel and nuclear energy projects.
All of its green bonds have helped fund the Eglinton Crosstown Light Rail Transit project in Toronto, the largest public transit expansion in the history of the region.
Green bond proceeds are paid into the Consolidated Revenue Fund of Ontario and are invested short-term in Government of Canada Treasury Bills.
An amount equal to the net proceeds of each green bond issue is recorded in a designated account in the Province of Ontario's financial records. These designated accounts track the use and allocation of funds to eligible projects.
The awards judges praised the "strong impact reporting".
Its annual impact report includes information on how much greenhouse gas (GHG) emissions are reduced through the implementation of clean transportation projects - the estimated aggregate GHG reductions across all projects amount to 590,000 tonnes per year starting in 2031.
Other information reported includes eligible projects connected with green bond issues, deduction amounts from the designated account balance, performance indicators, project updates and status reports for the projects.
It is a member of the Green Bond Principles and says that it will adopt any future impact reporting recommendations by the organisation.
In the future, Ontario is considering issuing green bonds not only in Canadian dollars but in other currencies as well, both domestically and internationally.