The Public Utilities Commission of San Francisco (SFPUC) issued two series of green bonds which are believed to be the first to incorporate a put option.

The notes were sold to international investors including in the US, UK, European Union, Switzerland, Indonesia, Japan, Singapore and Taiwan.

The Series A notes raised $228.87 million and were 4.1 times oversubscribed, while the Series C notes raised $179.14 million and were 3.1 times oversubscribed.

Eric Sandler, CFO of SFPUC, says: "The transaction attracted both large institutional as well as retail investors and the green label was a positive feature that helped attract additional demand."

The Series C notes, which mature in 30 years, are subject to a 'mandatory put', according to which they must be purchased by SFPUC on 1 October 2023. If it has insufficient funds to buy these notes, their interest rate will increase, to 6% per annum for the first 79 days, and 8% thereafter.

In 2023, the notes will be re-sold, and are likely to include another put option, Richard Morales, debt manager at SFPUC, told Environmental Finance. This could again be for five years, or for the remainder of the 30-year notes' full tenor, he said.

"It's our first venture into long-term variable-rate financing, which we wanted to introduce given the size of the utility's Wastewater Enterprise capital programme," says Morales.

With SFPUC's seventh green bond issuance, its transactions are worth a combined $1.44 billion, according to Environmental Finance's database.

Proceeds are used to fund part of SFPUC's Sewer System Improvement Project, including storm water, flood resilience, sewage treatment and wastewater upgrades. The projects are intended to address ageing infrastructure, seismic reliability, combined sewer discharges, rising sea levels and localised flooding.

"We hope green bonds will help us build long-lasting relationships with investors as well as expand our investor base internationally," says Michael Brown, environmental finance manager at SFPUC.