City of Toronto issues inaugural social bond, a first in Canada’s public sector

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Ontario Construction News staff writer

The City of Toronto has issued an inaugural social bond offering of $100 million – the first government in Canada to establish a Social Debenture Program.

This $100 million bond issue will mature on December 2, 2030. Investors paid a price of $99.98 to yield 1.602 per cent, which is the lowest borrowing cost the City of Toronto has ever secured.

“In the midst of a global pandemic, this $100 million issuance ensures the city can continue investing in essential social services, affordable housing and critical infrastructure,” Mayor John Tory said in a statement.

“The first of its kind in Canada, the social debenture program demonstrates our commitment to equitable social advancements for all Torontonians. The success of this social bond offering shows the continued strong market confidence.”

Proceeds will be used to help fund shelter, support and housing administration’s George Street Revitalization project and 1,000 new shelter beds projects.

Eligible projects are capital projects for various social initiatives, including:

  • social and affordable housing
  • affordable basic infrastructure (access to clean drinking water, sewage and sanitation systems and transit)
  • access to essential services (long-term care, senior services and emergency shelters) and
  • socioeconomic advancement and empowerment (public libraries and community hubs).

The Social Debenture Framework was verified by Sustainalytics, a global leader in environmental, social and governance research and ratings, ensuring the framework aligns with the International Capital Markets Association Social Bond Principles.

“Although COVID-19 has had a serious economic impact across the globe, capital markets are optimistically focused on re-opening economies and easing lockdown restrictions, Councillor Gary Crawford, Toronto’s budget committee chair, said in the release.

“Investor demand remains strong and the bond market continues to be favorable for the city to issue debentures. The low cost of borrowing will help us fund more key capital projects that align with the city’s social priorities.”

Toronto has one of the largest municipal borrowing programs in Canada and is a regular issuer in the public Canadian debt market with several sinking fund debentures each year. Debenture issues are initially distributed and traded by several Canadian investment dealers. Retail investors can contact their financial institutions to inquire about investing in the City of Toronto’s debentures.

More information about the City’s Social Debenture Program is available on the city’s website.

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