Green Bonds Boost

The Acting-Prime Minister, Attorney- General and Minister for Economy, Aiyaz SayedKhaiyum yesterday announced the issue of the first green bonds.

Fiji became the first emerging market to issue a sovereign green bond, raising $100 million to support climate change mitigation and adaption during the Pre-COP meeting in Nadi recently. Green bonds are fixed income, liquid financial instruments that are used to raise funds dedicated to climate-mitigation, adaptation, and other environment-friendly projects. This provides investors an attractive investment proposition as well as an opportunity to support environmentally sound projects.

Mr Sayed-Khaiyum, while speaking at a press conference at the Reserve Bank of Fiji in Suva, said the issue followed an overwhelming interest recorded in the week-long tender that saw the floated amount of $40 million being significantly oversubscribed.

“A total of $87.7 million were received in tenders for the two tenors of 5-year and 13-year bonds. A total of $60.10 million was received for the 5-year bond while a total of $27.61 million was received for the 13-year bond,” he said. Commercial banks also put in a combined tender amounting to $40 million.

“We thank the commercial banks for the support as this is the highest amount ever that the banks have tendered for any domestic bond. Given that the tender was oversubscribed, a total of $13.27 million was allotted to the commercial banks.

“Other local investors such as the Fiji National Provident Fund, insurance companies, Unit Trust of Fiji and others tendered a total of $47.70 million. There is also, for the first time, an overseas investor for the Green Bond. The participation rate recorded was three times than normally associated with Fiji Government Infrastructure bonds,” Mr Sayed-Khaiyum said.

He said “as advertised, only $20 million of each tenor was accepted at a coupon rate of 4 per cent per annum for the 5-year maturity and 6.30 per cent for the 13-year maturity.”

There will be significant issues in the coming months – December 2017 to May 2018 – in order to raise the targeted amount of $100 million. The floatations will be for the 13-year maturity only henceforth.

Mr Sayed-Khaiyum acknowledged and thanked the individuals and organisations who bid and put in tenders as it demonstrated their support for this initiative.

The RBF is the agency that implements the green bonds.

Government will be establishing a webpage to publish key information about Fiji’s green bond programme and framework.

Mr Sayed-Khaiyum said they will also be publicising various projects that will qualify under the funds raised through the bonds.

Projects financed from the green bonds will follow the internationally developed Green Bond Principles, and will focus primarily on investments that build resilience against the impacts of climate change.

Fiji will also use bond proceeds for projects supporting its commitment to achieve 100 per cent renewable energy and reduce its CO2 emissions in the energy sector by 30 per cent by 2030.