The FINANCIAL — London Stock Exchange Group on April 18 welcomed Fiji’s first international green bond to start trading on the green bond segment of its International Securities Market (ISM).
The dual-tranche green bond transaction includes a FJ$20 million ($10 million equivalent) tranche which will mature in 2022 at a yield of 4 percent, and FJ$40 million ($20 million equivalent) tranche to mature in 2030 at a yield of 6.30 percent. Fiji’s landmark transaction represents the first international sovereign green offering from an emerging economy and from a Commonwealth country.
Proceeds from Fiji’s landmark green bond will be used to finance the sustainable management of natural resources, renewable energy, water and energy efficiency, as well as clean and resilient transport and waste water management, according to London Stock Exchange.
Fiji’s green bond is part of the ambitious plan set out by Frank Bainimarana, Prime Minister of Fiji and President of COP23, during the 23rd Climate Change Conference (COP23) in Bonn, Germany last November. He highlighted the green bond as an affordable, credible and secure approach for emerging countries to tackle climate change. As COP23 President, Fiji has made access to climate finance a key objective of its presidency. The country has committed to annual reporting which will also be available to the market though London Stock Exchange, adding further market transparency.
Donald Brydon, Chairman, London Stock Exchange Group, welcomed the Hon Frank Bainimarama, Prime Minister of Fiji and President of COP23, and The Rt Hon Claire Perry MP, Minister of State for Energy and Clean Growth, to open London trading today and celebrate this inaugural listing.
Donald Brydon, Chairman, London Stock Exchange Group: “We warmly congratulate the President of COP23 and Prime Minister of Fiji on this landmark international green bond listing. Fiji is at the forefront of dealing with major weather-related events and has shown great leadership in making access to climate finance for island states a central part of the COP23 Presidency. The global community has a responsibility to offer every support to deal with these challenges.
“Fiji’s international listing represents the country’s deep commitment to address environmental issues and reinforces London Stock Exchange Group’s position as a strong partner for emerging economies and as a leading global listing venue for Green Finance”.
Frank Bainimarama, Prime Minister of Fiji and President of COP23: “We are very proud that Fiji’s green bond has been listed on London Stock Exchange, the premier market for green investments. Improving access to climate finance has long been a top priority of my government and I have also made it a key pillar of Fiji’s COP23 Presidency.
“With this bond, we have shown it is possible for emerging markets to develop financing mechanisms that are innovative, credible and transparent, and which align with global standards. We hope this bond serves as an example to other climate-vulnerable nations in finding innovative ways to raise finance for adapting to the impacts of climate change. We invite those in the finance sector to support and participate in this historic green bond launch and help fund new, resilient development in our country.”
Claire Perry, Minister for Energy and Clean Growth:“The transition to a clean, low carbon economy presents a multi-billion pound investment opportunity and we want UK businesses to take full advantage of it. We already have a world leading stock market, with more than 60 green bonds listed on London Stock Exchange, and we are determined to cement the UK’s position as a global hub for investment in clean growth.
“Today’s launch of Fiji’s first sovereign green bond on London Stock Exchange provides a ringing endorsement from the current Presidency of the Conference of Parties (COP) that London is the place to raise finance for climate resilience and mitigation in all sizes of market across the globe.
Fiji’s first international green bond is the latest in a long line of global firsts for London Stock Exchange Group (LSEG), including numerous high profile green bond issuances on London Stock Exchange
Following Fiji’s bond admission, London Stock Exchange is home to 67 Green Bonds raising $21 billion
Overall, there has been a 57 percent growth in green bonds listed on London Stock Exchange in 2017 (from 14 to 22 new bonds listed) and a 58 percent increase in amount raised ($9bn raised in 2017 vs. $5.7bn in 2016)
London has hosted many landmark green bond issuances including the first Green Covered Bond from China, the first Green Masala Bond, the first Green bond from the Gulf region and most recently, Fiji has become the first emerging market to issue a sovereign green bond
There are 24 ‘green companies’ with a combined market cap of $7 billion in London, including 13 renewable investment funds with a combined market cap of over $7 billion
FTSE Russell data shows that 25 percent of the largest global companies have already begun their transition to a low carbon economy
On 7 November 2016, FTSE Russell, the global index provider, announced the creation of a new index, the FTSE All-World Ex CW Climate Balanced Factor Index, the first to combine a smart beta factor approach alongside climate change considerations
The index has been chosen by Legal & General Investment Management for its new Future World Fund, which HSBC Bank UK Pension Scheme has selected for its equity default option, worth £4 billion, in its DC scheme
In 2015 London Stock Exchange became the first major exchange to launch dedicated green bond segments creating strict admission criteria aligned with ICMA’s Green Bonds Principles
LSEG has been supporting investors and issuers in the transition to a low-carbon and sustainable economy for over a decade, developing innovative products and services in close collaboration with the market. Its comprehensive sustainable finance offering is focused on green financing for issuers (both debt and equity), indexing and analytics. London’s markets are home to a diversified portfolio of green bonds, ETFs, renewable investment funds and corporates whose business models encompass alternative energy.
FTSE Russell, the global index leader, has long been a pioneer in the development of benchmarking tools enabling investors to integrate ESG factors in their portfolios and to track the increasing shift towards a green economy.
LSEG joined the UN’s Sustainable Stock Exchanges initiative as a Partner Exchange in 2014 and has also signed The Paris Pledge for Action.