This archive report was first published on 4 October 2019.
On October 4, 2019, Kenya's first green bond issue raised Sh4.3 billion ($41.45 million) to build environmentally-friendly student accommodation, marking a significant milestone in the country's efforts to promote sustainable development.
The bond was issued by Nairobi-based property developer Acorn Holdings, following the introduction of new rules in February to guide the issuance of green bonds. Stanbic Bank, the lead arranger, said the bond was priced at an interest rate of 12.25 per cent and rated B1 Global, a notch above the Kenyan government's rating of B2.
According to Stanbic Bank, the subscription book was well diversified, with significant interest from Kenyan domestic pension funds, commercial banks, insurance and reinsurance companies, and non-resident funds. The issue was structured as a 'restricted public offer', targeting sophisticated investors who received a 50 per cent guarantee from credit guarantees provider Guarantco on both their investments and the interest.
Experts believe that the advent of green bonds will help protect Kenya from the impact of extreme weather on the agriculture sector, which contributes about a third of annual GDP. Nuru Mugambi, a director at the Kenya Bankers Association, said, 'With the landmark legislation that zero-rates taxes on green bonds, we expect to see more issuance coming to market.'
Global green bond issuance is seen at $140-$180 billion this year, from $149.2 billion in 2018, according to HSBC.
