New York’s Metropolitan Transit Authority To Issue Green Bonds


New York’s Metropolitan Transit Authority will issue its first green bonds in a two-day event next week. 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.

In 2015, $41.8 billion in green bonds were issued, according to the Climate Bonds Initiative (CBI). MTA’s Transportation Revenue Green Bonds, Series 2016A (Climate Bond Certified) is the first bond issuance to be certified in the U.S. under CBI’s 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 MTA plans to launch a marketing campaign to go along with the new bonds in order to raise awareness about what green bonds are and how individual investors can buy them. The vast majority of municipal bond holders are individual investors.

Global credit ratings agency, Moody’s expects to see some $50 billion in green bonds issued worldwide this year. China and India are likely to issue the vast majority of those bonds, but the $500 million issuance from the MTA is significant. Approximately 8.5 million people use New York’s mass transit services each day and the MTA is responsible for maintaining that infrastructure. By capital raising through green bonds, the MTA is signaling that it wants to maintain its transit systems in more environmentally sustainable ways.

Seattle’s transit agency, the Central Puget Sound Regional Transit Authority, also issued approximately $940 million in green bonds last summer to finance projects for its light rail system.

“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,” MTA Chairman and CEO Thomas F. Prendergast said in a statement on the forthcoming bond issuance.