The African Development Bank (AfDB) has successfully launched an AUD 50 million 15-year Kangaroo green bond due March 2038.
The new issuance was arranged by RBC Capital Markets and sold to a single Japanese investor, Taiju Life Insurance Company.
This is the African Development Bank’s sophomore green bond in the Australian dollar market since the inaugural 15-year Kangaroo green bond was issued in 2016, and marks an extension of the Bank’s existing Kangaroo curve.
The funds raised through this green bond transaction will support the Bank’s efforts in the areas of climate change mitigation and adaptation. The bond proceeds will finance eligible green projects, including forestry conservation projects, aimed at supporting the transition to green growth in Africa in accordance with the AfDB Green Bond Framework.
Despite renewed global efforts toward climate change evidenced by the new and ambitious climate targets established at the 27th Conference of the Parties (COP27) through the United Nations Framework Convention on Climate Change (UNFCCC), Africa requires particular attention and a more targeted response.
Africa, with its unique biodiversity and ecosystems, including savannas, mountains, plateaus, deserts, and its variety of organisms and plants, is threatened by climate change unlike any other region. As a result, the transition to green growth in Africa has become even more important and urgent.
Japan’s announcement of the “Africa Green Growth Initiative” to promote and attract investments into sustainable green growth in Africa, is ample evidence of its recognition of the need for this transition. The announcement was made at the 8th Tokyo International Conference on African Development (TICAD8) in August 2022.
In order to promote sustainable development in Africa, the bank’s Ten-Year Strategy focuses on two overarching objectives: to promote inclusive growth and to support African countries transition to green growth.
The bank has contributed to improving the 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.
The transaction is the bank’s second green bond issued in 2023 across all currencies, following on from a successful SEK 1.5 billion five-year green bond issued in the Swedish krone market in January.
The Use of the Bond’s Proceeds
The bond proceeds will contribute to building resilience against the negative impacts of climate change, achieving sustainable infrastructure, developing ecosystems and promoting efficient and sustainable use of natural resources such as water, a sector particularly vulnerable to climate change across the continent.
Commenting on the bond issuance, Kristin Lien, Senior Portfolio Manager, Kommunalbanken, said he is delighted to support African Development Bank’s first Green Bond in the Norwegian market.
“It represents a great alignment of both our own and AfDB’s objective of mobilizing capital to finance the transition to a low-carbon, climate resilient future. We hope the success of this transaction will encourage other development finance institutions to raise more funding in the Norwegian Green Bond market in the future.”
Kristin Lien
Keith Werner, Division Manager, Capital Markets and Financial Operations at African Development Bank, also said, “As a pioneering participant in the ESG market, the African Development Bank is pleased to launch its inaugural Green Bond in the Norwegian market in collaboration with SEB in order to support the Bank’s commitment towards addressing the devastating effects of climate change in Africa while extending its investor reach in the Nordic market”.
“This Bond, issued under the Bank’s Green Bond framework, highlights the Bank’s consistent investments in sectors such as renewable energy, energy efficiency, clean transportation, biosphere conservation, but in particular, as we approach the UN’s Water Conference later this month, the increasingly important sector of sustainable water & wastewater management.”
Keith Werner
Ben Powell, Head of Sustainable Debt Capital Markets, SEB, said they are proud to assist AfDB’s continued expansion into new areas of the green finance market and support the delivery of their green growth strategy in Africa. “Later this month at the UN Water conference in New York we will be reminded of how water plays such a critical role in delivering on the sustainable development agenda, so it’s a great opportunity to highlight AfDB’s financing in this sector which represents close to a third of their green pipeline”.
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