Toronto-Dominion Offers $454 Million Green Bond

Toronto-Dominion Bank said it’s the first Canadian commercial lender to sell a so-called green bond, offering a C$500 million ($454 million) debt security tied to funding environmental initiatives.

The TD Green Bond matures April 3, 2017, and offers an investment that supports environmental mandates while providing a market rate of return, Canada’s largest bank by assets said today in a statement.

“The green bond market is at the relatively early stages of evolution,” said Patrick Meneley, vice chairman of investment banking at the Toronto-based firm’s TD Securities unit, which is managing the offering by itself. The issue “helps to further develop the green bond market for investors,” he said.

Initial pricing on the three-year notes is about 60 basis points more than government benchmarks, according to a person with direct knowledge of the transaction who requested anonymity because the terms aren’t yet public.

Green bonds are similar to traditional bonds, except that their proceeds are exclusively used to finance environmental projects. They’re issued by governments, private corporations, banks and international financing institutions such as the World Bank, which had its first sale in 2008.

Global Offerings

Worldwide issuance of green bonds more than quadrupled in the first quarter to about $8.75 billion from a year earlier, according to data compiled by Bloomberg New Energy Finance. That includes Toronto-Dominion’s offering and Export Development Canada’s $300 million sale in January, its first green bond and the nation’s fourth.

Last year, Brookfield Renewable Energy Partners LP issued a C$450 million bond paying 5.13 percent interest and maturing in November 2030 for its Comber Wind Farm in Ontario’s Essex County. That followed debt sales in 2012 by NextEra Energy Inc. and Elecnor SA’s Enerfin Energy Co. of Canada to finance renewable energy projects.

Ontario Premier Kathleen Wynne said last year that the province, Canada’s most populous, plans to issue green bonds in 2014. The offerings would be within the province’s existing borrowing program and target institutional investors with rates of returns in line with current borrowing rates in Canada.

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