Green bond to finance Canadian hospital project

The group delivering the North Island Hospitals Project in British Columbia has issued the first such bond to fund a P3 project in North America.

Tandem Health Partners, the preferred bidder awarded the North Island Hospitals public-private partnership (PPP; P3) project, raised about $231.5 million through a green bond it issued, British Columbia’s (BC) Finance Minister Michael de Jong, said.

The 32.3-year bond represents a milestone since it is the first time a green bond is being used to fund a P3 project in North America and the first time such a bond is being used to finance public infrastructure in Canada.

Green bonds are similar to traditional bonds, but the proceeds are used exclusively for projects with environmental benefits.

“Buyers were well distributed across insurance companies and fund managers, with both traditional buyers of public-private partnership project bonds participating as well as a number of new buyers,” British Columbia’s Finance Ministry said in a statement, noting that the issue was oversubscribed with investors being drawn to the province’s AAA credit rating.

“This successful issuance allows BC to provide leadership in a new and emerging green bond market,” the Ministry said.

The technical criteria, set by the government of British Columbia for the development of the project, include LEED gold certification, and energy and greenhouse gas targets. Consultant and technical advisor Altus Group assessed the project as 'green'.

Earlier this year, the Vancouver Island Health Authority named Tandem Health Partners – which includes UK developer Balfour Beatty, Gracorp Capital Advisers and others – as preferred bidder. The North Island Hospitals project includes a new hospital in Campbell River and a new hospital in the Comox Valley.

Tandem Health will design, build, partially finance and maintain the new hospitals under a 30-year concession. The C$606.2 million (€416.1 million; $568.2 million) cost is being shared by the province of British Columbia (60 percent) and the Comox Strathcona Regional Hospital District (40 percent).