West African Corporate Green Bond to Spark Issuance
West Africa’s first green corporate bond was sold this month and similar issuances are expected to follow as financial advisers and companies promote the asset class in a bid to attract more investment into the regional market.
The 10 billion CFA franc ($17.8 million) bond was issued by Emergence Plaza, which owns the Cosmos Yopougon retail complex in Abidjan, said Kadi Fadika-Coulibaly, managing partner of Hudson & CIE, which arranged the transaction. The sale of green debt on behalf of renewable energy companies and municipalities in the region is also on the cards, she said.
“We have had issuers and companies approach us, most of those are in the energy industry,” Fadika-Coulibaly said in an interview this week. “For Ivory Coast and West Africa for the rest of this year you will see more issuance.”
The bond sale is a first step by the region to tap increasing demand for debt used to tackle climate change. While over $300 billion of green bonds are sold globally every year, just $3.96 billion has been raised to date in Africa. Prior to the Emergence Plaza sale, just $64 million was raised by non-financial companies, according to the Climate Bonds Initiative, which advocates for the sale of such debt.
Hudson is advising on the potential sale of 30 billion CFA francs of green debt, including financing for projects in Ivory Coast and Burkina Faso, Fadika-Coulibaly said.
The demand for the bonds in the region is evidenced by the fact that a January sale of 750 million euros ($876 million) of debt for the funding of green and social projects was oversubscribed almost sixfold, Jean François Brou, chief executive officer of Société Ouest Africaine de Gestion d’Actifs, said in the same interview.
“There is great attraction for international investors into green bonds from our region,” said Brou, whose company is based in Benin and manages 80 billion CFA francs. “We see this as a real tremendous opportunity for us to lead the way in promoting green bonds as a new investment product.”
The eight-year notes sold by Emergence were issued on Aug. 12 with a yield of 7.5%, pricing at 150 basis points below the rate the company was paying on an existing 8.4 billion CFA franc bank loan that will be refinanced. Its terms require Cosmos Yopougon to expand its sustainability initiatives, including the recycling of waste.
HC Capital Properties, which developed and manages Cosmas Yopougon, will consider further green bond sales, according to Cheick Sanankoua, a co-founder and managing partner of the company.
“We have been trying to attract foreign investors into our market,” Fadika-Coulibaly said. “This could be a direct route.”
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