QuadReal Eyes Green Bond as Allied Issue Gets Huge Buyers List

QuadReal Property Group Ltd., the real estate manager for British Columbia’s $134 billion public sector pension fund, is considering refinancing debt maturing in June with a new green bond as recent issues show a growing investor base for such securities.

“If the markets are open and receptive, we’ll probably issue a green bond some time in the spring.” Chief Financial Officer Tamara Lawson said in an interview. “We think by the time that we’re going to issue, we will have enough use of proceeds to refinance the current bond that we have maturing.”

QuadReal, which has C$345 million ($270.8 million) of notes maturing in June, is considering its return to the green debt market as more evidence of high demand stacks up. Allied Properties Real Estate Investment Trust, for example, debuted with a C$600 million issue of 5-year green notes last week that pulled in 75 buyers, Chief Financial Officer Cecilia Williams said in an emailed reply to questions. That’s more than any other Canadian-dollar corporate debt sale so far this year.

Vancouver-based QuadReal sold its inaugural green transaction in July when it priced C$350 million of 10-year notes with orders from 57 investors. The company was able to price around three basis points tighter than where their regular securities would have been printed.

While yields in the bond market have declined since then, issuers have managed to keep extracting a so-called “greenium” in the most recent deals. In the case of Allied’s transaction, the green advantage was two basis points, said Williams, who added that the deal was covered more than 4.4 times.

“There’s a lot of demand for green bonds and now that we have that framework in place we’re in a position where we can issue,” said Lawson.

The strong demand for sustainable debt is part of a wider hunt for yield dominating debt markets. Last week, QuadReal issued C$400 million of its conventional securities and garnered an order book more than 4.5 times the deal size, Lawson said. The deal got 45 buyers, of which 11 were new investors, she said.

QuadReal, which announced in January a majority stake in eight rental housing developments in the U.K. for about C$1 billion, is open to potentially tapping bond markets in euros or pounds, she said. The firm is also increasing the size of its commercial paper program.

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