Nigeria’s apex regulatory institution, Securities and Exchange Commission (SEC), has approved Access Bank Plc’s book building as the lender is set to issue the first corporate green bond in Africa.
In a statement made available to newsmen, Access Bank disclosed that the book building which commenced on Thursday, February 21, 2019, would be concluded in exactly one week, after which the funding of commitment would begin on Friday, March 1, 2019.
The bank said, “The bond, a five-year fixed rate senior unsecured green bond of up to N15 billion is the first ever climate bonds standard certified corporate green bond to be issued in Africa. It has been awarded a B2 rating by Moody’s and verified by PwC (UK).”
It added that this followed the certification by the Climate Bond Initiative as having met the Climate Bond Standards.
The statement added that the management of Access Bank had in anticipation of the approval, launched the Nigerian Green Bond Market Development Programme in June 2018, in partnership with FMDQ OTC Securities Exchange and the SEC.
Understanding book building
Book building is a systematic process of generating, capturing, and recording investor demand for shares during an initial public offering, or other securities during their issuance process, in order to support efficient price discovery.
A look into what green bond entails
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 bonds.
However, the Nigerian Government, in 2017, sold the country’s first green bond worth N10.7 billion and plans to raise as much as N150 billion by 2021, according to the debt management agency. A green bond is a bond specifically earmarked to be used for climate and environmental projects.
Nigeria is Africa’s biggest oil producer and green bonds are part of the country’s plan to cut emissions and meet its obligations to the Paris agreement on the environment. The Securities Exchange Commission (SEC) and Lagos-based FMDQ OTC Securities Exchange launched the Nigerian Green Bond Market Development Program last year to encourage private companies to sell climate-related debts.
However, Access Bank Plc’s plans to sell Nigeria’s first corporate green bond to fund environmental projects, was last month (January), uncovered. The plan was disclosed by a person with knowledge of the matter.
According to the source, the bank, which could create Africa’s largest retail lender by customers with the takeover of Diamond Bank Plc, plans to raise about 15 billion naira in the first quarter for climate-related funds and programs.