NSE lists provisional guidelines for green bond issuance, to alienate defaulters

A provisional guidelines on how green bonds will be listed on the floors of the Nigerian Stock Exchange (NSE) has been released by the NSE, with the bourse indicating its willingness to alienate defaulters of the guidelines when operational.

A green bond is one issued to finance or re-finance in part or in full new and existing eligible environmental or climate project through the bourse. Nigeria had after signing up to the Paris Climate Change protocols, indicated it would raise green bonds to finance some environmentally friendly projects in agriculture, transportation and renewable electricity sources.

However, in the draft guidelines the NSE recently released in Lagos, it stated that the issuers of green bond shall clearly state that the bond is a green bond.

“Upon finding that the issuer has failed to comply with these Rules, the NSE shall declare in a release to the public that such Issuer’s Green Bond listing is no longer in compliance with the Rules of The Exchange, and that investors are to trade with caution on the bonds in light of the absence of up to date information, among other actions,” said a part of the guidelines obtained by OGN.

NSE equally noted that issuers shall comply with the rules, the Securities and Exchange Commission’s (SEC) regulations, and as well as the Exchange’s requirements for listing and issuance of bonds.

“The Issuer shall demonstrate that the proposed Green Bond shall comply with the green bond principles. The Issuer shall open an escrow account specifically for the net proceeds of the issue; and shall prudently manage the proceeds from the offer in order to ensure strict allocation to identified proposed projects.

“Issuers shall make and keep readily available, up to date information on the use of proceeds on an annual basis until full allocation of the proceeds, which shall be presented in an annual report to bondholders.

“The annual report shall be published in at least one national daily newspaper, and the issuer shall ensure that the information is published on and remains on its website throughout the tenor of the Green Bond,” said the NSE guidelines.

The draft guidelines further explained: “The issuer shall appoint an independent external reviewer to issue annual, and follow up assessment reports to confirm the alignment of the Green Bond issue with the key features of the green bond principles.”