The Federal Government of Nigeria will on Monday 18TH December 2017, open the first tranche of the much awaited Green bond valued N10.67 billion, of the total of N150 billion approved.
This was disclosed by the Director General (DG) Debt Management Office (DMO) Mrs. Patience Oniha at the Investors Forum held Friday in Lagos.
It was disclosed that the offer of the five year debt instrument will close on Wednesday 20th December 2017. According to the offer documents, minimum subscription is pegged at N10, 000,000, and N1, 000,000 increments. Also minimum denomination is pegged at N1, 000.00 and N1, 000 incremental.
At the forum which attracted custodian investors, pension managers’ financial institutions and other stakeholders, the DMO DG said that the Green bond is a product of mutual effort between the DMO and the Federal Ministry of Environment, also represented at the Lagos investors’ forum and road show.
She explained Green bonds market instrument used exclusively to fund projects that have specific environmental and/or climate benefits which explained the role of the federal ministry of environment in the bond issuance.
The DMO boss said that the instrument carries all features of federal government bonds in terms of coupon and tenor and would be listed on both the Nigerian Stock Exchange (NSE) and the FMDQ for trading in the secondary market.
Oniha said that Green bond offers two-fold contribution to the preservation of Nigeria’s climate and economic development and provides competitive investment returns relative to conventional bonds which its only risk has to do with sovereign risk exposure.
According to her, the government is conscious of the debt service to revenue ratio and foreign exchange volatility, hence the government is working towards reducing domestic borrowing.
The debt, she said offers economic and social development and expected to grow the economy by 5% annually, improve the standard of living. Enhance electricity access for all and also enhances afforestation.
Final use of Proceeds “Green Projects” according to her would be as selected by the Federal Ministry of Environment and included in the budget. She expressed confidence that the bond would be oversubscribed, considering the meager nature of the instrument.
All designated projects are to provide clear environmental benefits quantifiable by the issuer
The projects will require linkage with key targets in the Nationally Determined Contributions (“NDC”), which reflect Nigeria’s commitment to the Conference of Parties of the United Nations Framework Convention on Climate Change.
Where all or a proportion of the proceeds are to be used for refinancing, issuers are to provide an estimate of the share of financing versus re-financing.
Hajia Halima Buhari of the federal Ministry of environment in her presentation said that the green bond is manifestation of the government’s commitment to implement the global treaty signed in Paris in 2015 and ratified in 2016 by President Mohammadu Buhari.
The endorsement she said was demonstration of commitment to climate change initiatives from national intended contribution, to National Determined Contributions (NDC) on climatic change.