Since its debut in the green bond market in March 2017, the Province of Quebec has become a regular issuer. Its CAD800 million, five-year SEC-registered transaction in February 2019 was its fourth and largest green deal, taking its cumulative total to CAD2.3 billion.

The bond was originally expected to raise CAD600 million, but strong demand saw indications of interest rise above CAD2.4 billion and allowed the deal to be up-sized and to price at 46 basis points (bps) over Canadian government bonds, compared with initial guidance of 47.5 bps.

A total of 55 investors took part in the transaction, with interest largely driven by asset managers and banks. Investors with ESG mandates and/or signatories to the Principles for Responsible Investment took 94% of overall sales, according to one of the lead managers. About 20% of the issue was bought by investors based outside Canada, highlighting Quebec's good reputation with global investors and an increasing focus on ESG investing worldwide, the bank noted.

Asset managers took 55% of the paper, banks 29%, pension funds 8%, central banks and 'official institutions' 6% and insurers 2%.

Most of the proceeds from the transaction will be used to finance the Réseau express metropolitan rail project, a 67km public transport system that will link downtown Montreal with the city's airport. The CAD6.3 billion project is one of the largest automated light rail systems in the world and will include 67 stations and integrate with existing metro, commuter rail and bus networks.

The underlying green bond framework was reviewed by Cicero and awarded the highest possible rating (dark green).