August 29, 2016

New Moody’s Program Bolsters Recommendations Made by BNY Mellon on Assessing Green Bonds


Do green bonds really finance environmentally friendly projects?  The new Moody’s Green Bonds Assessment (GBA) program could help investors make that determination.

Moody’s program to rate the environmental credentials of green bonds bolsters recommendations made in July 2015 by the BNY Mellon whitepaper, Social Finance at Scale: Creating Value for Investors.

For the first time in the U.S., Moody’s in August assigned a GBA rating of GB1 to the Upper Mohawk Valley Regional Water Finance Authority in New York state for $8.78 million of water system revenue bonds.

The new rating system is consistent with a key recommendation of the paper, which discusses the need for investment “products that incorporate social finance metrics, providing tools for [investors] to monitor social finance adherence in their portfolios.”

“BNY Mellon believes this is a big step forward because the GBA can help investors determine if projects financed by GBA-rated bonds meet a standardized environmental framework,” said Tony Portuondo, head of BNY Mellon Corporate Trust’s public and not-for-profit business. “Building measurement standards in this space will serve to increase investor confidence and ultimately scale-up green investing.”

The funds were raised to improve the water system's infrastructure by increasing capacity and dependability, with approximately $4.05 million of the proceeds to be allocated to raw water transmission upgrades designed to improve the authority's ability to extract water from the Hinckley Reservoir during major droughts, when water levels are low in the reservoir.

BNY Mellon was appointed trustee, registrar, paying agent and escrow agent on the bonds.