[...]One year on, Ontario has selected its first recipient: the Eglinton Crosstown Light Rail Transit project, a 19-kilometre, “25 stations and stops,” system that runs east-west across mid-town Toronto. Most of the track will be underground. Tunneling work has started on the project that was estimated to cost $5.3-billion in 2010 and to be operational by 2020. The LRT will replace buses.
The project is noteworthy because it’s being developed as a public private partnership, understood to be the first for the Toronto Transit Commission. It’s a P3 because the winning consortium will design, build, finance and maintain the project for 30 years. Last December, two consortiums were identified with the preferred bidder being selected in 2014/2015.
Given that green bonds are standard debt obligations of the province – meaning they rank equally with other bonds it issues – why issue them and face a task that’s complicated because it requires independent verification? A couple of reasons are at work: such issues will potentially expand the investor base; and such issues may lead to the development of a Canadian green bond market. Until that development, issuers aren’t expected to gain any interest rate advantages.
When Ontario does come to market with an expected $500-million four-year deal, it will distribute the securities through its existing domestic benchmark medium term note program. It will also join a handful of such Canadian issuers.
Last January, the Export Development Corp, a federal agency, launched the country’s first such offering, a US$300-million financing that reflected “EDC’s commitment to the environmental aspects of its Corporate Social Responsibility principles.” At the time, the EDC said its current portfolio of green assets includes loans made to companies who are active in fields of preservation, protection or remediation of air, water, and/or soil, or the mitigation of climate change.[...]
