Kenya’s Capital Markets Authority (CMA) has approved the issuance of the country’s first unlisted green bond that seeks to raise 5 billion shillings ($48.45 million).
The green bond seeks to finance sustainable and climate-resilient student accommodation and is structured as a restricted public offer for sophisticated investors.
Being a restricted public offer, the issuer will raise the funds from only targeted sophisticated investors.
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.
Kenya is the third sub-Saharan African country to have guidelines for green bond issuance after South Africa and Nigeria.
“The issuance is a critical step in advancing the development of an effective ecosystem to support the establishment of green capital markets in Kenya in line with the Marrakech Pledge 2016, now that the necessary legal instruments are in place to facilitate such issuances’, said CMA Chief Executive Mr. Paul Muthaura.
The Authority was one of the pioneer signatories to the 2016 Pledge.
“The approval will enable the issuer to raise funds to undertake sustainable and climate resilient development,” he added in a statement issued in Nairobi.
As per the issuer’s Information Memorandum, the fixed-rate bond is certified as a green bond by Climate Bonds Initiative. Sophisticated investors participating in the bond will benefit from a 50 percent guarantee on principle and interest payments.
Muthaura added that the Authority will continue engaging with potential issuers in order to create a pipeline of green bond issuers to facilitate effective matching of demand and supply of green-centric capital and climate-resilient investing opportunities.
JK/as/APA