Fiji became the first developing country to issue sovereign green bonds, as the World Bank and the International Finance Corporation (IFC) provided technical assistance to the island nation.
The World Bank, in a press release, reported that the green bond was issued under the Capital Markets Development Project supported by the Australian Government. Under the project, the Australian government and the IFC promote private investment in the Pacific region.
Projects financed by the green bond will be invested in projects that follow the Green Bond Principles and will focus on climate change adaptation. Fiji will also use bond proceeds for projects supporting its commitment to achieve 100% renewable energy and reduce its CO2 emissions in the energy sector by 30% by 2030.
The bonds have two maturity dates with a tenure of five years and 13 years. The shorter tenure bond has a coupon rate of 4.00% while the longer duration bond will have a coupon rate of 6.30%, which are highly attractive given the coupon rate for the French bonds was just 1.75%.
“With this bond, Fiji has demonstrated that green capital markets can be created in emerging economies, and that all countries, big and small, have an important role to play in facilitating climate solutions,” World Bank Group President Jim Yong Kim said.
This was the third sovereign green bond issued globally. Poland was the first to issue a sovereign green bond worth €750 million in December 2016. France followed suit and issued a €7 billion sovereign green bond in January 2017. Several other countries are expected to issue similar bonds; Climate Bonds Initiative lists Morocco, Nigeria, Sweden, and Kenya as potential issuers of such bonds.
Sovereign bond issues strengthen the relatively nascent market of global green bonds where invested guidelines are still evolving. Being backed by a government, these bonds get immense attention, and investment, from investors.
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