City finds it really pays to go green
29 investors offer R4.3bn in 2 hours
THE CITY of Cape Town attracted offers totalling R4.3 billion from investors in its R1bn green bond – a significant success for the city’s efforts to go green. The city’s inaugural green bond of R1bn went on auction from 9am to 11am in a closed bidding process yesterday.
Cape Town mayor Patricia de Lille said within two hours 29 investors had made offers totalling R4.3bn in response to the R1bn that was sold, which cleared at 133 basis points above the R186 government bond.
De Lille said this response from the market was overwhelmingly positive and demonstrated the great appetite among investors to invest in sustainable projects.
She said the market’s enthusiasm was also a resounding vote of confidence by investors in the city’s governance, strong financial standing and ability to deliver on sustainable projects.
“Today’s auction is a demonstration that it pays to go green. This is a first for Cape Town and South Africa. It has been a tremendous learning curve and it proves that there are many innovative ways to raise the finance to address infrastructure needs and to respond to climate change.”
The mayor said in line with the city’s Organisational Development and Transformation Plan’s governance principles to enhance resilience and sustainability and improve resource efficiency, green bonds would be the way forward for the city in terms of how it financed projects.
“Going into the future, we will go greener because we have a duty to protect the planet, to build sustainable cities, and to reduce carbon emissions.
“Our green bond has been certified by the Climate Bonds Initiative, while international ratings agency Moody’s also awarded the bond a GB1 rating, which means they have been impressed enough with the green credentials and controls around this bond to name it ‘Excellent’.”
De Lille said the projects to be funded by the green bond were a mix of adaptation and mitigation initiatives, all of which were aligned with the city’s climate change strategy and included procurement of electric buses, energy efficiency in buildings, water management initiatives, sewerage effluent treatment and rehabilitation and protection of coastal structures.
“The city is ready to continue getting on with building a Cape Town which future generations can thank us for and with overlaying all our work, from financing implementation, with innovation.”
INNOVATIVE MEANS OF RAISING FINANCE TO ADDRESS INFRASTRUCTURE NEEDS A SUCCESS
De Lille said at the Amazon Web Services (AWS) Summit in Century City last week that Cape Town was one of the fastest growing cities in the country with a population growth of more than 30% and to cater for more people the city needs more infrastructure and more basic services.
“Our contribution as the city is to invest in infrastructure where we spend R6.5bn a year and we split this 40/60% on maintaining and repairing old infrastructure and investing in new infrastructure.”
Economic Opportunities MEC Alan Winde said earlier this week that the Smart Cities concept had the potential to address a range of challenges, including access to real-time data on the traffic flow of any road in the city’s network and allowing the period of the traffic light to be changed to ease congestion.
“The possibilities extend to the water system, where the exact source of leaks can be detected immediately. To become a smart city, we must first be a connected city.”