Sustainable finance makes inroads in Africa.
The first nonfinancial sector corporate green bond in Francophone West Africa, with an $18 million coupon and an eight-year tenure, for a retail complex in Cote d’Ivoire, has stirred up regional interest in sustainable finance.
Cote d’Ivoire’s Emergence Plaza successfully issued an oversubscribed green bond for its Cosmos Yopougon retail complex, which opened in 2018, at a 7.5% yield. It is now expected that placement of this $18 million equivalent long-term paper, issued in the CFA franc local currency, will be “the first of many in the region,” given the projected shift toward sustainable corporate finance.
“There are significant amounts of capital available in the region for investment in green bonds, but historically there have not been nearly enough products for them to invest in,” says Cheick Sanankoua, co-founder and managing partner for HC Capital Properties, which developed and financed the shopping plaza.
He added that regional institutional investors, including insurance companies, asset managers and pension funds, had subscribed.
The capital raised under the green bond has been earmarked to “refinance an existing local bank loan and to reinforce the financial and operational strength” of the shopping complex.
Financial-services provider Hudson & CIE, which acted as the placement agent for the transaction, views corporate green bonds in Africa as having the potential to “support more environmentally friendly real estate investment” and development.
“We will see significant growth in Africa’s share of the corporate green bond market in the medium term, given the need for diversified financing and the strategic shift toward environmentally friendly and sustainable investment,” says Kadi Fadika-Coulibaly, managing partner at Hudson & CIE.
Data compiled by the Climate Bonds Initiative, a green finance advocacy group, notes that the rapidly growing global market for green bond issuance has eluded most of Africa. The continent accounts for less than 1% of the more than $300 billion worth of green bonds issued annually.
Prior to the latest green bond issue, there were only two other green bond issues in Africa, one by Acorn Holdings in Kenya and the other by North South Power Company in Nigeria.