Kenya paves way for green bonds in 2019 with new rules
By Omar Mohammed
NAIROBI, Feb 20 (Reuters) - Kenya set the stage for the
country's first green bond with new rules on Wednesday, part of
efforts to diversify its capital markets.
Like other African nations, Kenya needs to raise billions of
dollars to invest in infrastructure projects including roads,
water and irrigation, railways and power generation.
"The legal framework is now in place and the rules are now
out there," Geoffrey Odundo, Chief Executive Officer of the
Nairobi Securities Exchange, said.
So-called green bonds are fixed income securities that raise
capital to help finance projects in renewable energy,
energy-efficiency, green transport and wastewater treatment.
"We are introducing a verifier component, because there is
need for verification of green assets and green financing ...
it's what makes it possible for issuance of green bonds," Odundo
said, adding that the target was to issue one in 2019 to provide
"traction" for other issuers.
"The government of Kenya have come up strongly, that they
are looking at doing a green bond and its one of the ones we are
keenly talking to," he said.
In January, HSBC said global green bond issuance is seen at
$140-$180 billion this year, from $149.2 billion in 2019.
Nuru Mugambi, director of public affairs at the Kenya
Bankers Association, said that there are two strong potential
issuers from the banking sector with one at an advanced stage.
But commercial lending rates capped in September 2016 at 4
percentage points above the central bank’s benchmark rate, may
make it difficult for banks to price the products.
"The rate cap is making it difficult for banks to come into
the capital markets to raise capital, therefore it's limiting
the bonds, but more so it's limiting the potential that we see
within the green bonds space," she said.
Last week, Kenya Electricity Generating Company said that it
plans to raise funds from the market later this year and it may
opt to issue the country's first green bond.
In 2018, finance ministry officials said that there was room
to raise funding through green bonds for infrastructure
projects, with an initial aim of about $50 million.
(Reporting by Omar Mohammed; Editing by George Obulutsa and
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