Thursday, April 21, 2016

Treasurer Chiang: $200 million Green Bond Purchase; Upcoming Green Bond Actions

California Treasurer John Chiang has announced the purchase of another $200 million in World Bank green bonds.  The bonds will be part of the state Pooled Money Investment Account  (PMIA) which invests idle state funds.

California was the lead purchaser of the $280 million bond issue.  Calvert Investments also participated.  The bonds will mature in October, 2018 and pay over 1% interest.  Comparable U.S. Treasury notes are paying just over .8% for a similar maturity date.

“This is a win-win for Californians who are not only interested in safe, solid-performing investments, but want to move the needle on combatting climate change,” said California State Treasurer John Chiang. “My office is excited about participating in the burgeoning green bond market, but we want to do it right. We want to raise money to combat climate change at the same time we get the best possible deal for our taxpayers.”

Treasurer Chiang spoke about green bonds at the United Nations in January

“World Bank green bonds help mobilize capital for projects that offer climate solutions. We welcome the continued support for the World Bank and the green bond market in general from key investors such as the California State Treasurer’s Office and Calvert Investments who recognize the value of investing for the future through bonds issued by the World Bank,” said Arunma Oteh, Vice President and Treasurer at the World Bank.

PMIA has been an early and regular purchaser of World Bank green bonds.  Purchases to date now total $1.3 billion.

Treasurer Chiang Plans More Green Bond Actions

Treasurer Chiang recently completed a green bond "listening tour" and heard about green bond opportunities and obstacles from a variety of market participants. 

According to a news release from Treasurer Chiang's office, his staff is drafting a report to identify the legal, economic, attitudinal and other barriers that have prevented the U.S. green bond market from developing as fast as those in Europe, Latin America and Asia. The report’s findings and related issues are expected to be the focus of a conference Chiang plans to hold early next year that will bring together investors, environmentalists and other thought leaders.  (See also prior CalGreenFinance post here)

More on the World Bank Green Bond issuance here.

Treasurer Chiang news release here.

Friday, April 15, 2016

California Becoming a Green Bond Hub

California is becoming a hub of green bond action.

Apple Computer recently issued a $1.5 billion green bond for their facilities and related activities, California PACE related programs continue to issue green bonds for energy efficiency and renewable projects, and the first U.S. bond certified to the upcoming Climate Bond Water Standard will likely be issued in California before summer.

California Treasurer John Chiang, a member of the Climate Bonds Standards Advisory Board, has been looking into ways to further boost the green bond market (see CalGreenFinance post here).

California government agencies have issued nearly $800 million in green bonds since late 2014, as summarized below.

California Green Muni Bond Issuances
IssuerDateAmountGeneral Purposes
State of California10/7/2014$300,000,000Mass Transit, Clean Water, Energy Efficiency
San Francisco Public Utilities Commission5/20/2015$32,025,000Renewable Energy
City of Los Angeles6/4/2015$188,755,000Wastewater, Digester, Water Purification
East Bay Municipal Utility District6/17/2015$74,335,000Clean Drinking Water, Conservation, Flood Protection, Renewable Energy, Biodiversity
City of Los Angeles6/30/2015$100,835,000Wastewater, Water Purification, Digester
San Diego Unified School District1/5/2016$100,000,000Energy Efficient Buildings, Renewable Energy

Green bond proponents are hoping the market will grow from the $42 billion in issuances worldwide in 2015 to $100 billion in 2016.  California issuers are contributing to the new totals.  About $2 billion in green bonds have been issued in the state since the beginning of 2016.  Another $500 million issue is expected soon from the IBank (see story here) and the San Francisco Public Utilities Commission will be issuing a green bond in the next month or so. 

Green Bonds are among the many tools California is using to demonstrate climate solution leadership.