TransLink plans to issue green bonds to help cover transit expansion costs

Oct 3 2018, 7:19 pm

Green bonds could help finance TransLink’s upcoming capital projects that will improve transportation infrastructure in Metro Vancouver.

The public transit authority is looking into issuing a new type of bond that allows investors to invest in green and low-carbon projects.

Examples of such capital investments include electric battery buses, new rail rapid transit lines, and perhaps even the Burnaby Mountain gondola to Simon Fraser University.

“We’re just figuring out the details. We’re just finishing our framework, and with that it will outline what we’re thinking in terms of timing and details and amounts,”┬áRob Malli, the Chief Financial Officer of TransLink, told Daily Hive, adding that the issue could happen as early as the end of the year.

Green bonds are similar to conventional bonds, which have been issued by TransLink annually since 2010. So far, the public transit authority has raised $1.53 billion through conventional bonds.

If all goes as planned, TransLink would be the first public transit authority in Canada to issue green bonds.

“The reward we get is more demand for our bonds, and we open ourselves more to green investors who have more demand in this space. What has shown in the market so far is that whenever you have more demand than supply, it puts pricing pressure to go even better than conventional bonds, by a little bit,” continued Malli.

He says this aligns with TransLink’s recently approved long-term strategy of cutting its emissions by 80% and completely switching to renewable energy sources by 2050.

Additionally, TransLink needs to find new revenue sources to help fund its total capital expenditure plan of $10.5 billion over the coming years. It anticipates $2-3 billion will need to be borrowed as the federal and provincial government commitments are unable to cover that.

“We are in the process of matching cash flows, looking at when we’re going to need the money for the expansions,” he said. “At TransLink, we’re really focused on being a leader in sustainable transportation. We think we have a really great story to tell, and we think this enables us to tell this story.

“The benefits incentivizes agencies like ours to be more progressive with our environment. It is our place to be more progressive in that nature, and that is part of our strategy. And it is great that we can become a part of the bond movement in this space because all investments should be positive investments for the community.”

Green bonds are common in Europe, but the Canadian market is still fairly new to the concept, he says. Within Canada, only Toronto and Ottawa have such programs, and the City of Vancouver recently announced its own green bond program last month.

The municipal government issued its first green bond worth $85 million to fund environmentally sustainable initiatives and projects, such as a new net-zero energy fire hall, a 200-unit social housing project in the Downtown Eastside with high green targets, and the district energy utility system in Southeast False Creek.

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