NGX promotes sustainable financial products associated with climate change and environmental challenges

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Kayode Tokede

As sustainable finance gains momentum globally, governments and corporate issuers are paying increasing attention to environmental, social and governance (ESG) factors, and investors, regulators and other stakeholders are encouraging stronger ESG practices.

As a sustainable exchange championing Africa’s growth, Nigerian Exchange Limited (NGX) is committed to playing an increased role in facilitating financing for a sustainable future.

As a member of the Sustainable Stock Exchange Initiative (SSE) since 2013, NGX has a long-standing commitment to fostering the growth of sustainable finance in Nigeria. The Exchange recognizes the critical need to stimulate sustainable finance as a tool to accelerate progress towards the achievement of the Sustainable Development Goals (SDGs) and to combat climate change and its impact, as provided for in the Paris Agreement on climate change.

NGX has demonstrated a strong commitment to sustainable finance over the years. In 2016, NGX conceptualized and developed the Green Bond product paper, which was adopted and championed by the Debt Management Office (DMO) and the Federal Department of the Environment. This effort led to the issuance of the first green bond of 10.69 billion naira (25.8 million dollars) at 13.48% over 5 years in 2017 to finance renewable energy development projects. The second tranche, 15 billion naira ($36.1 million) of 14.5% 7-year green bonds, was issued in June 2019 and was oversubscribed.

The sovereign issuance paved the way for the emergence of the corporate green bond market with N15 billion, 15.5% five-year fixed rate senior unsecured green bonds by Access Bank and 8.5 billion naira, 15.6% fixed rate senior green infrastructure guaranteed over 15 years surety by North South Power Company.

On April 15, 2021, North South Power Company (NSP) issued its second N6.33 billion ($15.3 million) 10-year, 12% fixed rate senior green bond series 2 due 2031 , bringing the size of the green bond market to 55 naira. 52 billion. It should be noted that all green corporate and sovereign bonds are listed on NGX.

NGX continues to work with key market stakeholders to build the capacity of existing and potential corporate green bond issuers on the green bond issuance process and reporting best practices and is also working closely with the Federal Ministry of Environment and Debt Management Office on the issuance of the third sovereign Green Bond in Nigeria. “We are delighted to continue our collaboration with globally recognized institutions such as IFC and CBI to share valuable experiences and best practices in green finance, and promote the development of a sustainable financial market in our ecosystem.”

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