Canada Issues Inaugural $5 Billion Green Bond
The Government of Canada announced today the completion of its inaugural green bond offering, raising C$5 billion to help finance the country’s investments in green infrastructure and other climate and environmental protection-related projects.
According to a government statement, demand for the bond was strong, with the offering more than 2x oversubscribed, drawing an order book of more than $11 billion. Environmentally and socially responsible investors represented 72% of the buyers, with international investors making up 45% of the investor base.
Steven Guilbeault, Minister of Environment and Climate Change, said:
“Canada’s green bonds are a major step in our plan to grow the sustainable finance market in Canada. Green bonds allow investors to take advantage of the many emerging green market opportunities by adding climate-friendly products to their portfolios. Expanding private sector investments through a sustainable finance market in Canada is key to achieving a cleaner, net-zero economy.”
Canada announced its intention to issue its first green bond in its Budget 2021, released last April, to raise capital to help achieve the country’s climate and environmental goals, which include achieving net zero emissions by 2050, and a 40-45% reduction in emissions by 2030. In June, the government appointed HSBC and TD Securities as structuring advisors for the offering, to provide advice on the design of a green bond framework, assist in the development of the ongoing program and support the inaugural issuance.
Drew MacIntyre, Vice Chair, TD Securities, said:
“This bond will help investors seeking green investment opportunities and will support government programs with clearly defined environmental benefits. We have been proud to work on this issuance with the Government of Canada. It is the largest Canadian green bond issued to date and is a big step forward for sustainable finance which is an important part of the transition to a greener economy.”
Canada’s Green Bond Framework, published earlier this month, outlines the areas of eligible expenditure for the offering’s proceeds, as well as the process used for project evaluation and selection, and allocation and impact reporting obligations. Eligible categories for investment under the framework include Clean Transportation, Living Natural Resources & Land Use, Energy Efficiency, Terrestrial & Aquatic Biodiversity, Renewable Energy, Climate Change Adaptation, Sustainable Water & Wastewater Management, Circular Economy Adapted Products, Production, Technologies and Processes, and Pollution Prevention & Control.
The offering is likely to be the first of many for Canada. In December, Canadian Prime Minister Justin Trudeau issued a mandate letter to Deputy Prime Minister and Minister of Finance Chrystia Freeland asking the minister to launch an annual program of green bond issuances.
Following the completion of the offering, Freeland said:
“The strong demand for this inaugural green bond issuance–the first of many issuances to come–is a sign of Canada’s future as a sustainable finance leader. As we continue our government’s record investments in climate action, leveraging private investment will help us meet Canada’s 2030 emissions reduction target and achieve net-zero emissions by 2050.”