This week, the Commonwealth of Massachusetts is issuing $100 million of “green” bonds as part of a $1.15 billion bond sale. Massachusetts’ reputation as a national leader on energy and the environment and its status in the innovation economy might lead people to see this as a bleeding-edge, high-risk aspirational statement rather than a straight-forward investment opportunity.
That view would be wrong, and completely miss the point. The issuance actually demonstrates that environmentally-friendly projects are a fundamental part of the core work done by government in building and maintaining its infrastructure and economy. Consider the range of projects that these bonds will support, as described in the offering:
- Clean Water and Drinking Water Projects – projects “designed to improve the quality of the Commonwealth’s drinking water or reduce pollution in the Commonwealth’s water supply according to state and federal standards”
- Energy Efficiency and Conservation Projects in State Buildings – projects “designed to reduce energy costs in existing public buildings or create new energy-saving “green” buildings”
- Land Acquisition, Open Space Protection and Environmental Remediation Projects
- River Revitalization and Preservation and Habitat Restoration Projects
Some of these projects do have aspirational elements – for example, the Accelerated Energy Project has a goal of greening 700 sites in 700 days in a portfolio of 4,000 state buildings. But those energy efficiency projects – and all the projects – are practical, achievable and use proven technologies and techniques. The message is that a sustainable investment can be a very mainstream investment.
The additional positive message of this offering is that there is a demand for sustainable investment opportunities. It was not created to meet a mandate; it was created because of perceived opportunity.
In putting together this package, Colin MacNaught, the Assistant Treasurer for Debt for the Commonwealth of Massachusetts, realized that he had a critical mass of projects that would appeal to investors with a mandate or an interest in supporting environmentally-friendly projects. Creating green bonds differentiates them from other offerings to attract new and additional investors.
Trading in these green bonds began June 5th, with an issuance date of June 11th. The bonds have a 20-year maturity.
| Principal | CUSIP | Maturity | Coupon | InitialPrice | InitialYield |
| $20,000,000 | 57582PN48 | 8/1/2033 | 3.75% | 98.604 | 3.85% |
| $15,000,000 | 57582PN55 | 8/1/2033 | 4.00% | 102.3 | 3.67% |
| $65,000,000 | 57582PN63 | 8/1/2033 | 5.00% | 112.804 | 3.2% |
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