Massachusetts To Offer “Green Bonds” To Investors
First State in the Nation to Offer Direct Investment in Environmentally Beneficial Projects
Massachusetts state officials today announced that the Commonwealth will sell “Green Bonds” to investors as part of a broader bond financing deal, becoming the first state in the nation to offer a tax-exempt investment option that directly funds environmentally sound infrastructure projects.
“Green Bonds are one more reason to invest in Massachusetts,” said Treasurer Steven Grossman. “Investors already have a healthy appetite for Massachusetts bonds due to our highest-ever bond rating, prudent fiscal management and strong economic outlook. Green Bonds will provide an added incentive for institutions and individuals who want to put their money in environmentally beneficial investments.”
“The Patrick-Murray Administration has made record investments in maintaining an incredible diversity of natural resources and infrastructure in the Commonwealth,” said Secretary of Administration and Finance Glen Shor. “Green Bonds will allow individuals and institutions the ability to us help strengthen our portfolio and back our policies in financing projects that help reduce our carbon footprint and improve energy efficiency.”
The Patrick-Murray Administration is committed to investing in energy efficiency and environmental conservation projects. In January 2012, the Patrick-Murray Administration announced the Accelerated Energy Program (AEP), which aims to reduce energy consumption by 20-25 percent over 700 state sites, creating about 4,000 clean energy jobs and saving the Commonwealth an estimated $43 million annually.
“Green Bonds” proceeds will be used to finance AEP and other projects in the following four categories:
- Clean water and drinking water projects;
- Energy efficiency and conservation projects in state buildings;
- Land acquisition, open space protection and environmental remediation projects; and
- River revitalization and habitat restoration projects.
“Under Governor Patrick’s leadership, Massachusetts has earned the number one ranking in energy efficiency, preserved more than 100,000 acres of land and created jobs through investments in clean energy,” said Secretary of Energy and Environmental Affairs Rick Sullivan. “These bonds will continue that commitment to our environment and our economy by offering investors the opportunity to finance these projects.”
The Green Bonds are part of a $1.1 billion bond sale that will occur between May 31 and June 4, 2013. Approximately $640 million of the bond sale will be used to refinance outstanding bonds to a lower rate. Another $475 million of the bond sale will be used for new-money capital construction, including $100 million of Green Bonds. All of the bonds will be general obligation bonds of the Commonwealth and have been assigned the ratings of AA+, Aa1 and AA+ from Fitch, Moody’s and Standard & Poor’s respectively.
“Green Bonds represents an innovative approach to financing projects that increase our energy efficiency, lower our Greenhouse Gas emissions and protect open space for future generations,” said George Bachrach, President of the Environmental League of Massachusetts. “The state will lead by example, retrofitting state buildings to save energy, investing in infrastructure to preserve our water supply, and purchasing open space that would otherwise be lost. The Patrick-Murray Administration once again is making Massachusetts a national leader that will draw new jobs to the Commonwealth.”
In addition to funding environmentally beneficial projects, state officials expect the Green Bonds to appeal to a wider range of bidders, thereby increasing competition and potentially lowering borrowing costs for the Commonwealth. The bonds could appeal to pension funds and endowments that are required to dedicate a portion of their holdings to green initiatives, spurring interest among some large institutional investors that might not otherwise buy Massachusetts bonds. Other issuers of Green Bonds include the World Bank, which since 2008, has issued more than $3 billion in such bonds to finance projects to reduce climate change.
As part of this sale, Massachusetts bonds will also be made available to retail investors in an early retail-only period to allow individual investors or their financial advisors to place orders for Green Bonds before institutional investors. To learn more about this bond sale people can visit www.buymassbonds.com.