First of its kind, Nigeria’s green bond opens with N10.6bn subscription offer

Nigeria on Monday became the first African country to launch a green bond, with the Debt Management Office (DMO) of the federal government announcing its opening of an initial subscription offer worth N10.69 billion.

According to the offer for subscription which the DMO put out in Abuja, the bond would be used exclusively to fund clean energy projects identified in the 2017 budget.

As part of its features, the bond has a five-year tenure, an interest rate of 13.48 per cent – payable bi-annually, and equally backed by the full faith and credit of the federal government of Nigeria.

It will be listed on The Nigerian Stock Exchange (NSE) and FMDQ over-the-counter (OTC) Securities Exchange, as well as being classified as liquid asset by the Central Bank of Nigeria (CBN).

FMDQ is an OTC securities exchange with a mission to empower the financial markets to be innovative and credible, in support of the Nigerian economy.

Also, subscription for the bond opened on Monday, December 18 and will close on Wednesday, December 20.

According to the DMO, green bonds which are often called climate bonds, are like regular bonds but with a slight difference in that they can only be used to finance projects identified to have environmental benefits including massive contribution to emissions reduction.

The DMO noted that the issuance would signal Nigeria’s commitment to the Paris Climate Change Agreement, as well as set the tone for subsequent issuance of such by state governments in the country.

It also said it would give investors that are interested in preserving Nigeria’s environment the opportunity to invest in such and earn returns, adding that it would diversify government’s funding sources and deepen the offerings of Nigeria’s capital market.

DMO’s Director-General, Patience Oniha, had initially stated at a press conference in Abuja that the pricing will reflect secondary market rates.

It is expected that Nigeria would through the bond, reduce its CO2 emissions by 40 per cent by 2030 in support of the Paris agreement. The DMO stated in this regards that it had set up administrative procedures to ensure that proceeds from the bonds are channeled to directly to the stated projects in transparent manners and with periodic monitoring to ensure proper utilisation.