SEC to Issue Rules for Green Bonds as FMDQ OTC Deepens Market

The green bond market in Nigeria will soon witness a boost as the Securities and Exchange Commission (SEC) prepares to release rules to guide issuance of green bonds in the country.

Green bonds are fixed income, liquid financial instruments used to raise funds dedicated to climate mitigation, adaption and other environment-friendly projects. They provide investors with an attractive investment proposition and an opportunity to support environmentally and socially sound project. The federal government pioneered green bond issuance raising N10 billion.

But in order to make the bond market more attractive, the Acting Director of SEC, Ms. Mary Uduk, said that the commission was in the process of approving green Bonds rules, noting that it would be released to the market in no distance period.

Uduk disclosed this at the Nigerian Green Bond Market Development Programme Launch organised by FMDQ OTC Securities Exchange in Lagos.

“We are in the process of approving the rules and any moment from now they will be released to the market. We are getting inputs rules from stakeholders and participants in the market. You cannot do anything without structures in place. SEC is trying to put up necessary structures that will guide the market when the time comes,” Uduk said.

She said that green bonds would deepen the nation’s capital market, noting that the new product provides enormous opportunities that would turnaround our environment.

According to her, the federal government had set a benchmark for issuance of Green Bonds following successful outing in 2017 unlike Sukuk that was pioneered by a state government.

Uduk said SEC was working with Climate Bonds Initiative, an international organisation with the largest capital market of $100 trillion bond market, for climate change solutions to strengthen internal capacity.

“We don’t want a situation where corporate will want to raise green bonds and it will sit there because there is no internal capacity,” she added.

Meanwhile, the Managing Director/CEO of FMDQ OTC Exchange Securities, the Mr. Bola Onadele.Koko, said that the company had formalised its partnership with the Financial Sector Deepening (FSD) Africa and CBI through the execution of a Cooperation Agreement to support the development of the Nigerian green bond market.

He explained that the partnership would facilitate the establishment and development of a Green Bond market in Nigeria, support the developer TN of guidelines and listing requirements.

Onadele added that it would develop a pool of Nigeria-based licensed verifies to support issuers and develop a pipeline of green investments and facilitate engagement with extant and potential investors.

According to him, it will support broader debt capital markets reforms that have an impact on the nongovernment bond market in Nigeria.