Kenya’s first green bond issuance injects Sh4.3b into Acorn
By Zachary Ochuodho, October 4, 2019
Kenya’s first green bond has raised Sh4.3 billion to build environmentally-friendly student accommodation, the issue’s lead arranger said yesterday.
Acorn Holdings Ltd raised Sh4.3 billion out of Sh5 billion it needed from the bond which it issued in September, a few months after new rules were unveiled in February to guide issuance of green bonds. The issue closed yesterday.
Green bonds are fixed income securities that raise capital for projects that have positive environmental and climate benefits including renewable energy, energy efficiency, green transport and waste-water treatment.
Stanbic Bank, which arranged the deal, said the bond was priced at an interest rate of 12.3 per cent and rated B1 Global, a notch above the Kenyan government’s rating of B2.
Speaking during the closing of the Green bond issuance, Acorn Holdings Ltd chief executive Edward Kirathe said the firm was delighted to have successfully pioneered the green bonds in Kenya.
“The bond was raised from a diverse mix of market players include pensionfund managers, commercial banks, insurance and international development finance institutions,” said Kiraithe.
The issue was looking to raise a minimum of Sh2 billion and a maximum of Sh5 billion, Stanbic said.
It 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. Over-the-counter trading will be allowed.
Interest rate
The advent of the green bonds will help protect Kenya from the impact of extreme weather on the agriculture sector, which contributes about a third of annual gross domestic product, said Nuru Mugambi, a director at the Kenya Bankers Association.
“With the landmark legislation that zero-rates taxes on green bonds, we expect to see more issuance coming to market,” she said.
Central Bank of Kenya governor Patrick Njoroge challenged banks to restructure their programmes in a bid to enhance issuance of green bonds to help mitigate climate change.