State of Connecticut Treasurer's Office
$250,000,000 | State of Connecticut Treasurer's Office | Social Bonds
In May 2021, Mr. Redd served as lead banker for UBS Financial Services Inc. (“ UBS “) on a Senior Managed financing for the State of Connecticut Treasurer’s Office (“State”). Specifically, the Treasurer’s office issued - $990.520 million General Obligation Bonds Series 2021 BCD & A.
The transaction was notable as it marked the State’s first issuance of Social Bonds in the amount of $250 million. The State had long contemplated incorporating Environmental / Social / Governance (“ESG”) bonds into its debt portfolio. Specifically, since the Treasurer’s Office funds a large K-12 school construction program statewide, these projects fit into the ‘Social’ component of the ESG designation. However, there existed hesitation to adhere to the ongoing disclosure responsibilities associated with ESG bonds.
Under the State’s debt policy, a portion of the proceeds of its annual general obligation issuance would reimburse the State for monies spent on local K-12 school construction. Mr. Redd’s banking team, with an in-depth understanding of the ESG marketplace, pointed out that since the transaction proceeds were reimbursing the State for school construction monies already spent, the traditional ongoing disclosure guidelines which focus on the construction progress of the designated project until all associated bond proceeds are spent did not apply. Thus, the State ‘self-designated’ the K-12 series of bonds as Social Bonds and did not commit to ongoing disclosure. The rating agencies agreed with this approach and affirmed the State’s ratings.