BANK Windhoek launched Namibia’s very first sustainability bond and raised around N $ 277 million privately.
The five-year instrument has a coupon rate of JIBAR + 1.50% and will mature in June 2026.
The issue, and its launch, comes just six months before the bank’s Namibian $ 66 million green bond expires, and is the first to be issued in Namibia, although it has already been issued in Africa. southern.
It is not known why the bank chose the private placement route, but this exclusivity normally carries a better interest rate for investors, as opposed to when offered to the public.
Sustainability bonds are financial instruments that take the form of a bond, but the proceeds of which are used exclusively to finance or refinance a combination of green and social projects.
It is not clear which area of green and social projects the bank intends to distribute these funds to, but has indicated that it will assess, at its discretion, social projects, with respect to funding needs. , on the basis of the “main objectives and impact of the project”.
Normally, projects eligible for funding include those focused on renewable energy, energy efficiency, green buildings, sustainable waste management, sustainable agriculture and tourism, as well as investments in health and development facilities. ‘quality education, accessible and innovative.
According to the bank’s head of sustainable investments, Ruan Bestbier, the Covid-19 has led to a sharp increase in demand for innovative financial products such as green and sustainable bonds that facilitate and promote the transition to a more sustainable economy.
“In Namibia we are experiencing global warming and the effects of climate change on our environment and our local businesses are evident. It is important to note that the proceeds of the sustainable bond will support a wide range of projects offering broad societal, economic and environmental benefits, ”he said.
In 2020, sustainable debt issuance reached a record high of $ 415 billion worldwide, up 60% from 2019.
Green bonds still dominate the sustainable finance market, however, other products, such as sustainable bonds, are catching up as the market increasingly diversifies in a low interest rate environment. to meet the growing demand from investors and customers.
The bank’s chief executive, Beronice Hans, said the green and sustainable bonds issued by the bank are milestones, not only for Bank Windhoek and Capricorn Group, but for Namibia as a nation.
“We are unequivocally setting the tone for our commitment to sustainable finance. We believe that green and sustainable bond issues meet our clients’ sustainability requirements. These bonds allow them to create a complete value chain, from raising favorable financing, offering green loans on attractive and competitive terms, to facilitating the transition to a low-carbon and resilient future. for customers, ”noted Hans.
Durable bonds have also gained popularity in other parts of Africa such as Kenya, Ghana and Nigeria, as well as in South Africa.
Last month, The Namibian reported that Ghana was planning to issue durable bonds with the aim of expanding access to education.
According to a Bloomberg report, if successful, this educational bond would be the first to be issued in Africa at the government level. Ghana was also celebrated this year as the first African country to issue zero coupon bonds – a move that has sparked a debate on how going this route could lead to more expensive debt issuances in the future.
It has been necessary to move away from conventional forms of financing over the past year, and this enduring obligation is expected to result in increased issuance of several instruments.
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