(Bloomberg) -- Ontario Power Generation Inc. sold green bonds after adding nuclear power to its eligible use of proceeds as that type of energy gains traction as an option to comply with carbon emission reduction targets.
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Ontario’s largest power generator priced C$300 million ($228.5 million) of 10-year bonds at the tight end of yield guidance between 177 and 180 basis points over the government curve, according to people familiar with the matter. The transaction got orders for over 5.8 times the deal size, said the people.
OPG is following Bruce Power LP -- Canada’s only private-sector nuclear generator -- which late last year issued what it said were the world’s first green bonds for nuclear power. Including nuclear power among green investments is controversial because of concerns about waste disposal, the potential for weapons proliferation and the potentially devastating consequences of accidents.
OPG’s framework focuses on nuclear reactor refurbishment to extend the plant’s lifetime by 30-plus years, renewable energy and climate adaptation and resilience, CICERO Shades of Green, an external reviewer, said in a report on OPG website. “Being subject to Canadian regulations mitigates the possibility for weapon proliferation and accidents.”
The updated framework comes days after lawmakers at the European Union, which has has been a leader on green financing, voted to allow natural gas and nuclear energy to be labeled as green investments. The Toronto-based company opened books for the bond sale one day after Chief Financial Officer Aida Cipolla held a fixed-income investor call organized by BMO Capital Markets and CIBC Capital Markets.
CERO Shades of Green rated OPG’s framework as “medium green,” the second-highest on a scale of three levels.
While refurbishment of CANDU -- a type of nuclear power reactor developed in Canada -- can achieve the higher rating of “dark green” in the Canadian context, “the lack of implemented long-term solutions for spent fuel renders the shading medium green,” the report said.
A press officer for OPG didn’t provide immediate comment.
(Adds pricing details, information on investor demand.)
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