Oregon will issue its first sustainability bonds

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Oregon plans to issue its first sustainability bonds with a $40 million sale that will help fund affordable housing projects across the state.

The $40 million taxable issuance is part of a larger $140 million general obligation bond sale announced this week.

“Buyers of Oregon Sustainability Bonds will know that they are helping finance critical projects that will strengthen our communities, improve the economy, and conserve natural resources,” state Treasurer Tobias Read said in a press release Tuesday.

Proceeds from the bonds will go towards financing grants for the construction of affordable housing for low-income residents. They would help create 500 units of housing statewide in under-served areas, according to a preliminary offering statement.

“This new round of bonds will continue to bring much needed rental housing, as well as new permanently affordable home ownership opportunity to working Oregon families,” said Oregon Housing and Community Services Director Margaret Salazar in the news release.

The state has made environmentally friendly policies a goal since it approved a sustainability plan in 2001, said James Sinks, a spokesman for the treasurer’s office. With other agencies around the country beginning to use sustainable bonds, Oregon officials wanted to see what kind of interest there might be for such projects with its inaugural offering, he said.

“The idea is that sustainability is an Oregon value,” Sinks said in an interview. “We want to look for ways to advance that make communities stronger and make the economy stronger while being smart with resources.”

Oregon plans to self-designate the bonds as sustainable instead of seeking certification but it will abide by the guidelines the International Capital Markets Association uses to certify sustainable bonds. They include increased transparency with annual reports on how the money is spent throughout the life of the bonds, Sink said.

Moody’s Investor Services rates Oregon GO bonds Aa1 while Fitch and Standard & Poor’s both assign them AA-plus ratings.

“Oregon's stable outlook reflects the sound governance that improves fiscal stability, and strong economic growth that will support planned increases in reserves,” Moody’s stated in an April 27 report.

The rating agency noted that the state’s high dependence on personal income taxes poses some risk but it is mitigated by growth in revenues and its reserves.

Hawkins, Delafield and Wood LLP of Portland, Oregon is the bond counsel for the sale. The financial advisor is PFM Financial Advisors.

The bonds are being underwritten by Morgan Stanley , Citi, Bank of America Merrill Lynch, D.A. Davidson and Co., Fidelity Capital Markets, Piper Jaffray and Co., US Bancorp Investment, Inc. and Wells Fargo Bank.

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Taxable bonds Green bonds Primary bond market State of Oregon Oregon