Bank Windhoek issues first Green Bond

07 December 2018 | Bankwese
Bank Windhoek, a wholly Namibian-owned commercial bank, this week successfully issued the country's first Green Bond – the first commercial bank to do so not only domestically, but across the southern African region.

The Green Bond is listed on the Namibia Stock Exchange (NSX) and complies with the Sustainable Stock Exchanges (SSE) Initiative, a UN Partnership Programme of the UN Conference on Trade and Development (UNCTAD) and the UN Global Compact. The aim of the SSE is to build the capacity of stock exchanges and securities market regulators so that it is able to promote responsible investment in sustainable development and advance the performance of corporate companies on issues of environmental and social impact as well as governance.

“As a member of Capricorn Group, Bank Windhoek aims to become the green financier of choice for sustainability projects in Namibia and in other countries in which the group operates. As the only 100% locally-owned commercial bank in Namibia, Bank Windhoek shares the responsibility to protect our country for future generations by actively contributing to and facilitating the transition to low-carbon and climate resilient economy,” said Baronice Hans, managing director of Bank Windhoek.

“For this reason, the bank aims to obtain alternative sources of funding for its green lending activities by raising funds in the debt market through a local Green Bond issuance, of which the proceeds will be used to finance only eligible green projects and assets throughout Namibia,” said Claire Hobbs, chief treasurer of Bank Windhoek.



Instrument

Green Bonds are generally a fixed income instrument where the proceeds are exclusively applied to finance or re-finance, in part or in full, new and/or existing eligible green projects and which are aligned with the four core components of the International Capital Market Association's (ICMA) Green Bond Principles (GBP). “In its simplest form, the bank will raise a fixed amount of capital, repaying the capital (principal) and accrued interest (coupon) over a set period of time,” Hobbs explained.

Bank Windhoek developed a Green Bond Framework as the core document against which the management, eligibility and success of the bond issuance is benchmarked.

“Bank Windhoek has been an implementing partner of the Sustainable Use of Natural Resources and Energy Finance (SUNREF) programme by Agence Française de Développement's (AFD). The funding from SUNREF aims to finance renewable energy projects within Namibia.

“This initiative was a good learning curve for the bank's staff and clients involved in related renewable energy projects, and the high demand for funding from the SUNREF resource pool encouraged Bank Windhoek to investigate the viability of expanding its green lending activities by raising alternative funds,” commented Ruan Bestbier, sustainability analyst at Bank Windhoek, who developed the Green Bond Framework.



Projects

The cornerstone of a Green Bond is the use of the proceeds of the bond.

The proceeds of each successful Bank Windhoek Green Bond issuance will be used to finance, and refinance, in whole or in part, other eligible projects in Namibia included in the International Finance Corporation (IFC) Definitions and Metrics for Climate Related Activities. Eligible projects include: renewable energy, energy efficiency and resource efficiency, green buildings, sustainable waste management, sustainable land use, clean transportation, sustainable water management, climate change adaptation, green trade and climate Smart agriculture.

“We are very excited be part of this first Green Bond issue in Namibia. We, as Old Mutual Investment Group Namibia, take pride to be part of this ever changing environment in a positive and up-lifting way through standing for initiatives that form part of something bigger than ourselves,” said Christoff Bauernschmitt, head: alternative investments at Old Mutual Investment Group Namibia.

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