PHOENIX - The San Francisco Bay Area Rapid Transit District is set for its first green bond issuance Tuesday and Wednesday, when it will become the first transit agency in the western U.S. to issue certified green bonds.
BART plans to sell approximately $389 million of general obligation bonds over the two days, debt rated triple-A by both Moody’s Investors Service and S&P Global Ratings.
The bonds issued under Measure AA and Measure RR, passed in 2004 and 2016 respectively, will be repaid with property taxes collected in the three BART counties of Alameda, Contra Costa, and San Francisco. About $89 million of the issuance will be used to refund prior Measure AA bonds, while the remaining roughly $300 million will go towards the first of the $3.5 billion system renewal that voters approved when they passed measure RR last year.
A small portion of the issuance, about $19 million, will be federally taxable. The new money is set to help the agency tackle a variety of safety and reliability issues with its 1970s vintage rail network, including updates to stations, power infrastructure, track, and more.
The upcoming issuance will be BART's first green bond financing, an increasingly popular special designation which lets investors know that the funds raised from the bonds will be directed toward environmentally sustainable projects.
The BART deal has been certified under the standards of the Climate Bond Initiative, a London-based organization that describes itself as an “investor-focused not-for-profit, promoting large-scale investment in the low-carbon economy."
“As such, BART will be breaking ground as the first transit agency in the western U.S. to issue these certified green bonds, and the second in California across all sectors,” BART said in a release.
The transit agency also said that its strong fiscal management and high ratings have put it in a good position to finance its infrastructure needs in coming years.
“BART's stellar general obligation bond credit rating—earned through years of prudent financial management among other factors—makes it easier for the district to borrow money for future improvements while generating a reputation for trustworthiness among creditors and investors.”
Barclays and Stifel are lead underwriters of a syndicate that also includes 11 other firms. May 9 will be a retail-only order period, with institutional orders being taken the following day. The deal is scheduled to close June 1.