Green bonds: an opportunity for Nigeria

www.climatebonds.net

Green bonds: an opportunity for

Nigeria

Stakeholder Roundtable Session

Justine Leigh-Bell, Director Climate Bonds Initiative

29 September 2017

Lagos

What are Green Bonds?

Green bonds are debt securities issued by financial, non-financial or public entities

where the proceeds are used to finance 100% green projects and assets

Just like regular vanilla bonds. “green” is a bonus feature to the bond.

It’s about the projects and assets, not the issuer.

1. Proceeds go to Green2. External review/certification 3. Annual reporting

* New and/or re-financing

Issuer Benefits:

✓ Access to investors / investor

diversification

✓ Deeper engagement

✓ Marketing / brand positioning

✓ Development bank investor

and credit support

✓ Price?


Green bonds: a growing market 2017

$130+


Green bonds: Use of proceeds is diversifying


$93tn institutional investors AuM

- SRI = $21tn global

- $43tn at UN Climate Summit

- $20tn insurers x10 climate investments by 2020

Central banks: PBOC, BoE, various others

Investor driven

Pension $30tn

Insurance

$30tn

Sovereign

wlth $6tn

Funds

managers,

mutuals,

foundations

$27tn


A global phenomena

> $10bn outstanding

$1bn - 10bn outstanding

< $1bn outstanding

USA $35bn China $36bn

Supra-

nationals

= $42bn

Germany $15bn

Netherlands $14bn

France $19bn

Sweden $6bn

India $3bn

Canada $3bn

Mexico $2.6bn

Brazil $3bn


Axis Bank $500m, BBB-

Yes Bank, $161m, BBB-

Shanghai PD Bank $250m, AA

Ag Bank China $1bn, A

NAB $246m, Aa2

DKB $600m, AAA

ANZ $467m, AA-

ABN-AMRO $558m

HSBC $547m

Westpac $362m

Case examples

South African bonds Tech USD year % Rating Tenor

IDC Green Bond RE 580m 2012 9% AAA 14

Nedbank Green Savings RE 480m 2012 N/A BBB 5

CPV PWR Bond SPV Solar 111m 2013 11 BBB 16

Johannesburg City Mixed 136m 2014 10.18 BBB 10


An $895bn climate-aligned universe

$674bn unlabelled

climate-aligned bonds

$221bn labelled green

bonds

Bonds labelled

as ‘green’

financing green

assets and

projects.

Bonds issued by

entities enabling

a low carbon

economy but are

not labelled

green.

$895bn


Green city bonds -

“Cities today are home to about half the global population but represent almost two-thirds of global energy demand and 70% of carbon emissions from the energy sector, so they must play a leading role if COP21 commitments are to be achieved”

– Fatih Birol, Exec Director, International Energy Agency

• Over 100 cities, sub-sovereigns and municipalities have issued green

bonds

• Green city bonds have been issued by cities in all continents

• City agencies also count: municipal banks, transport authorities, water

utilities, etc.

• Huge potential for new cities to enter the market across the world

including in: China, India and Japan

Assets that qualify


Green Bond Principles – ICMA

Proceeds must go to green / Explain process for project selection; use 2nd party review / Track proceeds; use auditor to verify / Report each year on details

Climate Bonds Standard & Certification: incorporates GBPs into a standardized framework with green definitions

National Green Bond Guidelines: China, India, Nigeria, South Africa, Brazil

ASEAN Green Bond Framework

Moody’s/ S&P green assessment tools: quality of review & reporting

Guidelines and Reviews


Certification: affordable, easy


Verifiers around the world

StandardsBoard

Participants in the Certification process

Issuers to date

http://upload.wikimedia.org/wikipedia/en/2/25/CalSTRS_Logo.gif

The Road Ahead…

1. Blue-chip issuance

2. Market education

3. Develop incentives

4. Aggregation vehicles

5. Grow green projects pipeline


Green bonds: an opportunity for Nigeria

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