Muni Impact | November 28, 2022

Investor demand for Atlanta’s $369 million ‘social bond’ cuts city’s interest payments

Amy Cortese
ImpactAlpha Editor

Amy Cortese

ImpactAlpha, Nov. 28 – Under the banner of “Moving Atlanta Forward,” the city raised $410 million in general obligation bonds this month, including $369 million designated as “social” to fund recreation, transportation, public safety and other capital projects.

Social bonds, which raise funds to finance projects with social benefits, have proved popular with environmental, social and governance, or ESG investors. Atlanta’s inaugural social bond series drew orders of more than $1.2 billion from 54 institutional investors.

The strong demand enabled bond yields to be reduced by between 2 to 5 basis points, depending on the maturity. Atlanta’s social bond framework was reviewed by Morningstar Sustainalytics.

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The issuance follows New York City’s first social bond in October, which raised $400 million for affordable housing projects and similarly allowed the city to lower its cost of capital. “Long term, it brings a whole new set of investors to the city’s program,” Tim Martin with NYC’s Office of the Comptroller, said on ImpactAlpha’s recent Agents of Impact Call.

Atlanta’s chief sustainability officer, Chandra Farley, told ImpactAlpha that bond proceeds will go to parks, recreation centers, public safety facilities, and city buildings “all priority places where we need to take climate action.”