Financiers Target First Ever Green Bond In 2019 With New Rules

Two unnamed financial institutions have come together to issue Kenya’s first ever green bonds, the country’s banking sector lobby disclosed on Wednesday.

A green bond is a fixed income instrument whose proceeds are used to finance or refinance projects which generate climate or other environmental benefits that conform to green guidelines and standards.

This follows regulators’ approval of the legal framework to issue the listed and unlisted financial instruments at the Nairobi Securities Exchange (NSE)

“The launch of the green bonds market has been embedded in the legal framework through the publication of a Policy Guidance Note (PGN) on Issuance of Green Bonds and the approval of amendments to the NSE Listing Rules by CMA,’’ Muthaura said.

He said green instruments will play an important but niche role in driving the growth of Kenya’s capital markets in next five years in line with the Marrakech Pledge which calls for an increase in the volume, flow and access to finance for climate projects.

“The amendments to our listing rules to facilitate issuance of green bonds will enable the NSE offer local and international issuers additional source of green financing, improve investor diversification as well as enhance issuer reputation thus leading to growth in our market,” NSE chief executive Geoffrey Odundo said Wednesday during the launch of the amended rules.

Kenya Bankers Association (KBA) director of public affairs Nuru Mugambi said the two unnamed Kenyan banks are firming up plans to issue the special bonds to raise money in the war on climate change.

The Green Bonds Kenya Annual Report for 2018 says the green bond market globally has grown tremendously with issuance totalling $155.5 billion ( Sh15.5 trillion) in 2017 and an estimated $250-$300 billion (Sh25-30 trillion) in 2018.

The partners in the programme include the National Treasury and Planning, CBK, KBA, NSE, Climate Bonds Initiative, Financial Sector Deepening Africa and Dutch Development Bank FMO.