Kenya’s first green bond gets CMA approval

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The Capital Markets Authority (CMA) has approved the first green bond which will be issued by the property developer Acorn Group and Private Equity fund Helios. This is in a bid to raise Ksh. 5 Billion for the construction of student hostels.

Green bonds are basically security instruments that are  aimed at facilitating investors to raise funds towards projects that are environmentally friendly, including renewable energy and eco-friendly transport grids.

Acorn and Helios target to build up to 3,800 university hostel units in Nairobi at a cost of about Ksh. 7.4billion. They have already put up more than 1,000 units in Ruaraka, Jogoo Road and Parklands under the Qwetu brand.

The fixed rate unlisted bond is being issued as a private placement, meaning it is being marketed to a select number of investors only, hence its tenor and coupon were not disclosed in the CMA. The bonds investors are also getting a partial guarantee from GuarantCo, which will see them recover up to 50 percent of their principal and interest in case of a default.

The green bond market globally has grown tremendously with issuances totaling Ksh. 16 trillion in 2017 and an estimated Ksh. 25.7-31 trillion last year. Kenya launched its green energy programme in 2017, with the Government initially setting the 2018/2019 financial year for the first publicly traded green energy bond.

CMA Chief Executive Paul Muthaura, had this to say, “The issuance is a critical step in advancing the development of an effective ecosystem to support the establishment of green capital markets in Kenya in line with the Marrakech Pledge 2016, now that the necessary legal instruments are in place to facilitate such issuances.”

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