FG to issue first green bond in April

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From Juliana Taiwo-Obalonye, Abuja

The Federal Government, yesterday, said it will commence the issuance of its first sovereign green bond in April, which will be used to fund a range of climate-related initiatives including mass transit, land re-afforestation, remediation and solar projects. It is also considering issuing international bonds by December 2017.

The Sovereign Green Bonds project is part of a strategic process by the Federal Government to widen the nation’s funding options to catalyse economic rebound and offer the vast majority of Nigerians vibrant funding new alternative.

According to the government, the green bonds issuance will be the first stage to enable Nigerians tap into the growing global market for green bonds, which as of end of 2016 comprised $576 billion of unlabelled climate-aligned bonds and $118 billion of labelled green bonds, in line with Climate Bonds Initiative in London.

The green bond, the first of its kind in Nigeria, will be the first sovereign issuance by an African nation.

Briefing State House correspondents, the Minister of Environment, Amina Mohammed, at the end of the Federal Executive Council meeting,  presided over by Acting President, Yemi Osinbajo stated that “The green bond is very much on track for issuance in the first quarter of this year. We have had too much interest and people are actually bringing in technical support. This is the sovereign green bond and I think that it is very important to note because what we want to do again is taking the Nationally Determined Contributions, (NDC) and bringing it to life.

“It is not just a document we signed, it is taking projects out that will rely on resources coming from the country. To do that first thing is that we have to make sure it has integrity but by the end of the year, we can talk about issuing green bonds that are international.

We already had indications from the stock exchanges in the UK, China, that issue most of the green bonds in the world today at over $400 billion; they will be happy to come in our direction and do so.”

“This is finding additional funding and focusing better on looking at low emission projects and so it is important to see the Ministry of Power involved, agriculture, FCT coming up with the transportation programme and the environment coming up with something on deforestation.

So look out for the green bonds; by the beginning of April we should have it,” Mohammed who was attending her last FEC meeting as a Minister said.

She resumes as the Deputy Secretary General, United Nations next month.

International investors and sustainable finance experts will today (Thursday) gather in Lagos for a Green Bonds Capital Markets and Investors Conference to deliberate its long-term approach to green finance and planning around project pipelines. Acting President Yemi Osinbajo is expected to grace the event.

President Muhammadu Buhari had on the sidelines of the United Nations General Assembly in New York, signed the Paris Agreement, stating that Nigeria will float its first ever green bond.

The plan to float the bond is indicative of the government’s priorities and climate change commitments under Nigeria’s Nationally Determined Contributions (NDC) as assented to in the Paris agreement.

…Seeks Reps’ approval for $500m eurobond 

From Ndubuisi Orji and Kemi Yesufu, Abuja

Meanwhile the Federal Government is seeking the approval of the House of Representatives to issue a $500 million eurobond in the international capital market to finance its deficit in the 2016 budget.

This was contained in a letter addressed to the Speaker of the House, Yakubu Dogara, and signed by the Acting President, Prof. Yemi Osinbajo, which was read at plenary yesterday.

According to the letter, the eurobond is expected to be issued between February and March this year, to enable the government meet its approved “capital expenditure funding plan.”

Osinbajo noted that Line Items 229 and 244 of the 2016 Appropriation Act of the Federal Government provided for a deficit of N2,204.742 billion and new borrowings of N1,818.675 billion.

He added  that “the Act also provided for domestic borrowing of N1,182.798 billion and external borrowing of N635.877 billion in Line items 245 and 246 respectively.

“The Speaker may also wish to note that while the approved domestic borrowing has been fully incurred, the N635.877 billion external borrowing has not been fully accessed. The external borrowing incurred to date consists of $600 million from the African Development Bank (AfDB) and $1 billion eurobond from the International Capital Market (ICM) only. Thus, based on the 2016 appropriation and applying the average exchange rate, there is headroom to access further international funds.”

The Acting President said following the oversubscription of recent $1 billion eurobond issuance, the government wants to take advantage of the favourable market conditions to issue the $500 million eurobond to fund capital projects in the 2016 budget, which is still in operation. He noted that being a market-based instrument, the terms and conditions may only be determined at the point of issuance.  “It is important to note that the previous issues of $500 million, $1 billion (consisting of two tranches of $500 million) and $1 billion in January 2011, July 2013 and February 2017 respectively were given at coupons of 6.75 per cent, 5. 125 per cent, 6.375 per cent and 7.875 per cent based on the prevailing market conditions.

“The Debt Management Office (DMO) and the Federal Government appointed transaction parties to the issue are committed to working assiduously to secure the best terms and conditions for the Federal Government,” Osinbajo noted.

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