Africa’s first 'Sovereign Green Bond' by Nigeria records N101m oversubscription

shakirudeen taiwo

January 5, 2018 3:32 PM

A green bond is a tax-exempt bond issued by the government of a country or certified agencies for development of brownfield sites and environmentally friendly projects.

The African debut of Sovereign Green Bond by Nigeria has recorded N101 million (0.94 percent) over-subscription from investors.

According to a statement released by the Debt Management Office (DMO), the total subscription of the bonds by both local and foreign investors was N10.791 billion as against a total offer of N10.69 billion.

“The debut Sovereign Green Bond offered to the general public in December 2017 was very well received by a wide range of investors. At the close of the offer, the total subscription received was N10.791 billion compared to the N10.69 billion offered,” the statement reads in part.

A Green bond is a tax-exempt bond issued by the government of a country or certified agencies for development of brownfield sites and environmentally friendly projects. Hence, Green bonds are debts raised for green building and sustainable designed project.

Also Read: Everything you should know about Sukuk bonds and why it is becoming popular in Africa

The DMO also revealed that issuance of the bond is backed by Paris Agreements on the climate and environment.

“It also shows support for the Paris Agreement on the Climate, which Nigeria has endorsed” the DMO noted.

Rating of Nigeria’s Sovereign Green Bond by Crediting Ratings Agency

The Moody rated the bond ‘Excellent’, and the first debt instrument from an African government that would be so rated by the rating agency.

The DMO had offered N10.69 billion Sovereign Green Bond for a Tenor of 5 years and Coupon of 13.48 percent.

As a result of this rate, the debt instruments had commercial banks, pension funds, asset managers and retail investors as its major holders.

The following projects are to be financed with the proceeds of the bond: Energising Education Programme, Renewable Energy Micro Utilities and Afforestation Programme.

The DMO expressed its commitment to providing products that meet the needs of investors for their portfolio preferences and to continue to promote financial inclusion.

shakirudeen taiwo