Japan Supports South Africa's Foray Into Green Bonds Investment!
Nearly one year ago on Tuesday 23 August 2022, the African Development Bank (AfDB), rated Aaa/AAA/AAA/AAA (Moody’s/S&P/Fitch/Japan Credit Rating, all stable), issued a 200 million South African rand (ZAR) 1-year Green Bond due September 2023. The bond, which pays a coupon of 6.90%, was arranged by Daiwa Capital Markets Europe and sold in a Private Placement format to a single Japanese institutional investor, Sony Bank, in support for green financing in African countries. This is the first AfDB Green Bond denominated in ZAR, after successful green bond issuances in US dollars (USD), Swedish krona (SEK), and Australian dollar (AUD) since the Bank established its Green Bond framework in 2013.
The funds raised through this transaction will be used to finance eligible green projects in accordance with the African Development Bank’s Green Bond Program for the purpose of supporting African countries transition to green growth. The green bond proceeds will contribute to building resilience against the negative effects of climate change, achieving sustainable infrastructures, developing ecosystems and promoting efficient and sustainable use of natural resources such as water, a sector particularly vulnerable to climate change across the African continent.
In order to promote sustainable development in Africa, the Bank’s Ten-Year Strategy focuses on two overarching objectives: inclusive growth and transition to green growth. The Bank has contributed to improving lives in Africa by providing better access to water, energy and food, enabling sustainable use of natural resources, and promoting innovations, employment and economic growth.
Gaku Funakoshi, Head of Treasury and Investment Department, Sony Bank, said: “With this investment, Sony Bank is pleased to contribute to the achievement of the SDGs, as an ESG responsible investor, and furthermore will strive to contribute to the development of sustainable society in accordance with Sony Financial Group’s ESG investment policies”.
Keith Werner, Division Manager, Capital Markets and Financial Operations, African Development Bank, said: “We are very pleased with the successful issuance of our inaugural Green Bond in a private placement format in the South African rand market and recognize Sony Bank’s role in helping the Bank to broaden and diversify its investor base in support of our aim to foster green growth by financing eligible climate change projects and working towards achieving the continent’s SDGs”.
Sophie Caillebotte, Head of Debt Capital Markets, Daiwa Capital Markets Europe, said: “Daiwa is delighted to have helped in arranging this inaugural Green ZAR Private Placement for AfDB and Sony Bank after several months of patient monitoring from all parties to match the investor's yield target. AfDB is a natural ZAR issuer, keeping proceed in the currency even for small amount, and offering ESG profile as well, either through their Green, Social bond frameworks or with one of their "High 5s". Sony Bank is a committed ESG investor with specific investment targets in this currency. We are glad that both interests could meet and this transaction rewards a longstanding relationship between the issuer and the investor, who previously met in Tokyo”.
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