MTA to issue Green Bonds to help pay for infrastructure renewal


Written by Jenifer Nunez, assistant editor
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Metropolitan Transportation Authority / Patrick Cashin

The Metropolitan Transportation Authority (MTA) will offer its first-ever Green Bonds to the public in a two-day order period starting February 17.

 

The bonds are certified by the Climate Bonds Initiative, an international not-for-profit organization that supports financing for projects around the world that help reduce the impacts of climate change. The bonds’ proceeds of $500 million will pay for continuing work on infrastructure renewal and upgrade projects on New York City Transit, Long Island Rail Road and Metro-North Railroad that were begun during the MTA’s 2010-2014 Capital Program.

“Eight and a half million people travel on MTA trains and buses every day,” said MTA Chairman and Chief Executive Officer Thomas Prendergast. “By leaving their cars at home and embracing mass transit, New Yorkers play a dramatic role in reducing carbon emissions. These bonds recognize the ways in which mass transit and commuters work together to keep carbon out of the atmosphere and that makes them the perfect choice for people who want to invest in the renewal and modernization of the greatest transportation system in the world, while at the same time helping New York to be greener and healthier.”

The MTA has launched a targeted marketing campaign aimed to encourage New Yorkers to consider purchasing the bonds. Ads will appear online on the websites of media outlets that cover the New York region and over the air on New York-area radio stations.

“Supporting public transportation is a powerful action that you can take to reduce greenhouse gas emissions,” the radio ad says. “You have an opportunity to not only sustain the transportation network that is essential to the New York metro region, but also to help combat climate change and reduce our region’s carbon footprint.”

Green Bonds were popularized in 2010 as a method for raising capital for climate-friendly projects across the globe. In 2015, $41.8 billion in Green Bonds were issued, according to the Climate Bonds Initiative, an international nongovernmental, nonprofit organization dedicated to stimulating investment in projects and assets emphasizing environmental sustainability. MTA’s Transportation Revenue Green Bonds, Series 2016A is the first bond issuance to be certified in the U.S. under the Low Carbon Transport Standard.

The bonds are being issued under the MTA’s Transportation Revenue Bond credit, which is backed by MTA’s operating revenues and state subsidies dedicated to the MTA.

The bonds’ financial characteristics are typical for bonds backed by the Transportation Revenue Bond credit. It will pay interest at a fixed rate, with interest payments made every May 15 and November 15. The interest rate and final maturity date will be set next week. Interest on the bonds is exempt from Federal, New York State and New York City personal income taxes.

 

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