Massachusetts to Sell More Green Bonds
Massachusetts is preparing to offer another round of so-called green bonds to investors, state Treasurer Steven Grossman said Tuesday, Earth Day.
Grossman said Massachusetts wants to build on its first-in-the-nation, environmentally oriented bond sale last year. The sale will occur this summer, according to Grossman, who said it will offer investors an investment option that directly funds environmentally beneficial infrastructure projects.
"Green bonds were a resounding success when we first offered them, and we anticipate that there will be a very strong appetite for this upcoming sale," said Grossman, a Democratic candidate for governor.
Last year's $100 million green bonds sale was part of an overall $670 million general obligation bond sale that ran from May 31 and June 4. Fitch Ratings and Standard & Poor's rated those bonds AA-plus, while Moody's Investors Service rated them Aa1.
In the first issuance, according to Grossman, green-bond proceeds financed 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.
Grossman said green bonds' appeal to a wider range of bidders effectively increases competition and possibly lowers borrowing costs.
He said the bonds are appealing to pension funds and endowments that must 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 $4.5 billion in such bonds to finance projects to reduce climate change.