Access Bank of Nigeria has set a new milestone among peers as the first bank to co-host the launching of the corporate green bond programme for corporate and sub-nationals like the states and private sectors.
The Tier 1 lender said the move reaffirms its commitment in investing in projects that are geared towards improving environmental sustainability.
“It is a lead that we have taken for many years. If you recall, at the Central Bank of Nigeria (CBN) award for sustainability, we cleared all the four awards within the banking space. So it is no surprise. However, we will continue to add value, sustainable products, funding, and financing asset that will impact positively on the environment, clients, and on Nigeria while still making money and giving good returns to our shareholders,” Creg Jobome, Executive director, risk management at Access Bank said told BusinessDay.
The corporate green bond programme is an initiative that was put forward through a combined partnership between FMDQ OTC Securities, Climate Bond initiative (CBI) and Financial Sector Deepening (FSD) to develop green bonds in Nigeria.
In March this year, the trio signed a cooperation agreement to develop green bonds in Nigeria and foster the issuance of corporate/non-sovereign green bonds, and as part of efforts to understand the market the corporate green bond programme was launched on Thursday this week.
Justine Leigh-Bell, Director of Market Development for CBI said the firm has partnered with FMDQ because they are market organisers and infrastructure catalyst that have the local expertise to rally around all participants in the debt capital market.
She noted that over the last three months, they have been in engagement with government and regulatory bodies like the PENCOM, SEC, CBN, and Development bank of Nigeria, Federal Ministry of Environment,
Federal Ministry of Finance and these engagements have yielded positive results.
In December 2017, the federal government through the DMO raised as much as N10.69bn ($29m), making Africa’s biggest oil producer to become the first on the continent and fourth in the world after Poland, France and Fiji to issue a security that raises funds for environmental projects.
The fully subscribe bond was a five year tenor were investors receive a 13.48 percent annual coupon.
The DMO said that the major subscribers to the bond were majorly Public Fund Administrators (PFA’s), contributing 75 percent of the investment in the green bond while the remaining was shared among banks with no foreign investor buying into the bond.
The debt office however encouraged banks to actively participate in the green bond issuance this year as they expect to see a form of corporation rather than the competition that was seen in the last issuance as a more aggressive road show will be done to create more awareness.
Access bank said it did not partake in the sovereign green bond issuance by the federal government because the volume was small
“There was a lot of engagement around the FGN green bond since the actual process was an FGN led activity which means that exposure to it was after what they chose to share in the newspapers also, the volume was small therefore liquidity was an issue with it thus making us loose the appetite in investing in it,” Access bank said.
Furthermore, we were not also sure that there was going to be a secondary market to facilitate such sales issuance
However, we had an expectation that it was going to be like a trigger in setting the toll for the market rather than say it is the only green bond in the market so there must be other corporate bonds to support it which is why we are doing this to make the market actively liquid and offer diversification and options for different people to key into.
The FGN bond is getting bigger he said, therefore you will see more banks keying in as people complained that the last one was too small so Also, you going to see off takers once the liquidity signal is there on the credibility as the Federal government has said it will bench mark it to a normal treasury bill or bond so that it will become a bit more liquid and tradable.
Jobome said the market should expect a lot of green product, a lot of green process and a lot of environmentally led sustainable activities that will help the bank improve its foot print on how it operate
