Nairobi bourse plans rolling out the green bonds

The Nairobi Securities Exchange (NSE) under the watch of the Capital Markets Authority (CMA) has rolled out a legal framework to support issuing of green bonds.

Trading on the NSE electronic board. FILE PHOTO | NMG 

IN SUMMARY

  • The new segment will provide issuers with a wide array of solutions to support green and social bond issuance, giving both retail and wholesale investors an opportunity to invest in these tailored instruments.
  • Green bonds are becoming increasingly popular globally as countries race to mitigate the devastating effects of global warming in line with the Paris Agreement of December 2015.
  • Proceeds from such issues go into supporting projects in sectors such as energy, agriculture, waste management, water, transport and urban planning.

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The Nairobi Securities Exchange (NSE) under the watch of the Capital Markets Authority (CMA) has rolled out a legal framework to support issuing of green bonds.

The new segment will provide issuers with a wide array of solutions to support green and social bond issuance, giving both retail and wholesale investors an opportunity to invest in these tailored instruments.

The NSE has invited the public to submit written comments on the draft provisions.

“The NSE wishes to develop a segment for the listing of green and other sustainability labelled and certified instruments,” said the NSE in a notice.

“Green instruments are fixed income instruments whose proceeds are used to finance or refinance new or existing green projects and assets that generate climate or other environmental benefits and societal co-benefits.”

The programme is backed by the Central Bank of Kenya (CBK), CMA, and the Treasury.

“Proceeds of the green bonds include financing of climate smart agriculture, resource efficient manufacturing, green affordable housing and green and climate resilient agriculture,” said the NSE.

The public should submit comments on the proposed framework by September 21. In May Treasury principal secretary Kamau Thugge said Kenya was on the path to becoming the third country in sub-Saharan Africa — after Nigeria and South Africa — to float a sovereign green bond to partly bridge the over Sh562.7 billion budget deficit.

Dr Thugge did not, however, disclose the size of the bond whose proceeds go into climate change-aligned projects, but insisted it will be floated between this July and June next year.

Green bonds are becoming increasingly popular globally as countries race to mitigate the devastating effects of global warming in line with the Paris Agreement of December 2015.

Proceeds from such issues go into supporting projects in sectors such as energy, agriculture, waste management, water, transport and urban planning.

The size of the global green bond market nearly doubled last year to $155 billion (Sh15.66 trillion) from about $82 billion (Sh8.28 trillion).

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