Going green;Kenya’s green bond issue and the operational rules therein

At time when the globe is facing environmental climate related issues, every country is doing the best they can too avert the effects of the same s well as cushioning for the cushioning for future.It is on this basis that Kenya launched a legal framework for green bonds, paving way for the first expected issue later this year.

A green bond is a bond specifically earmarked to be used for climate and environmental projects. These bonds are typically asset linked and backed by the issuer’s balance sheet, and are also referred to as climate.

The guidance came a week after Kenya Electricity Generating Company (Kengen) announced plans to raise funds from the market by issuing the first green bond in the country.

CMA chief executive Paul Muthaura said issuers of unlisted or listed green bonds will be required to appoint an independent verifier to conduct a pre-issuance review and confirm to the investors, the authority and NSE in case of listed green bonds.

“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.

NSE chief executive Geoffrey Odundo said amendments to the NSE listing rules will enable the exchange to mobilise domestic resources and international capital flows earmarked exclusively for environmentally beneficial investments to support the country’s transition to a sustainable economy.

“The approval of the amendments to our listing rules underscores our commitment to continue offering investors with a wide variety of investments instruments for their varied investments needs,’’ Odundo said.

The launch of the regulatory framework is a culmination of the work undertaken by The Green Bond Programme established in 2017, whose aim was to develop a domestic green bond market.

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.

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.

In 2018, finance ministry officials said that there was room to create funding through green bonds for infrastructure projects, with an initial aim of about $50 million (Sh5 billion).

Kenya’s economy is highly relies on its natural resources with more than 50 per cent of the country’s GDP attributable to sectors that are directly or indirectly dependent on natural resources.

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