The successful listing of Access Bank’s N15billion Green Bond on the Luxembourg Stock Exchange (LuxSE) represents a major milestone in the development of sustainable financing in Nigeria.
The successful cross-listing of this 15.50 percent fixed rate green bond with five-year maturity has enjoyed many firsts including the first-ever climate bonds standard certified corporate green bond to be issued in Africa; the first to be listed on The Nigerian Stock Exchange (NSE) in 2019; and now, the first successful cross-listing of a bond born out of the partnership between NSE and LuxSE.
According to the World Economic Forum’s Global Risks Report, the top 5 risks in the world today closely related to climate change issues. There is, therefore, an increased urgency to reverse recent environmental trends such as ravaging bushfires, extremes of temperatures, floods, cyclones and season disruptions that have made the effects of climate change even more real. These developments have thrust the concept of sustainable financing into the limelight, allowing products like Green Bonds to gain increasing significance.
It is, therefore, no surprise that the green bond market has witnessed tremendous growth globally with a total of $181billion raised from global investors in 2019 representing a 14-fold increase from the $13billion raised in 2013. On the demand side, there has been heightened consideration of Environment, Social and Governance (ESG) factors in the demand for profitable investment products.
Looking at the Nigerian market, notable milestones have been achieved through the collaboration of public and private stakeholders. In 2016, NSE boldly reached out to the Ministry of Environment with a proposal for the issuance of a Green Bond which was embraced and championed by former Minister of Environment and now Deputy Secretary General of the United Nations, Amina Mohammed.This move led to a series of partnerships and innovations that have delivered gradual uptake in this market segment.
Among these were:The first ever Green Bonds conference which held at the Stock Exchange House, Lagos and was headlined by the Vice President of the Federal Republic of Nigeria, Professor Yemi Osinbajo;The issuance of the first 5-year N10.69Bn sovereign and certified green bond from the Nigerian Government under its Ministry of Environment and the Debt Management Office (DMO); The subsequent issuance of a 7-year, N15Bn sovereign Green Bond which was well received by investors with an over-subscription of 220percent;The listing of Access Bank Plc’s N15BN Green Bond and North South Power Company Limited’s N8.5bN Corporate Infrastructure Green Bond; and The signing of a Memorandum of Understanding between the NSE and the LuxSE to promote cross listing of bonds and foster the growth of sustainable finance in Nigeria
The Green Bonds market presents great opportunities to reap value if it continues to enjoy the unwavering commitment of key capital market stakeholders. Access Bank has pledged its support to the global climate change mitigation and adaptation agenda which seeks to promote responsible green lending globally. Group Managing Director, Access Bank Plc, Herbert Wigwe, affirmed that, “The cross-listing of the bond will make a material contribution to address climate change and provide institutional investors with access to a deep pool of green capital domestically and internationally.”
The NSE on its part has expressed its resolute commitment to the development of a sustainable capital market in Nigeria.
The Chief Executive Officer, NSE, Oscar N. Onyema, has been reported to have said, “We will continue to maintain a dedicated sustainable market segment which provides issuers, asset managers and investors, access to green, social, sustainable, or ESG-focused securities. Asides Green Bonds, this segment will also promote the development of green labelled Fixed Income Products, Indices and Exchange Traded Products (ETFs) that help direct funding of green projects and environmentally aligned issuers as well as the green transition that ensures market resilience to the economic impacts of climate change.”