*Continuing to make an impact with the bond
*N$227 million raised through private placement
*Opportunity to support socially and environmentally responsible projects
Bank Windhoek successfully issued and listed the country’s first Sustainability Bond on 2 June 2021. As with the Green Bond in 2019, the Sustainability Bond is also a first for commercial financial services institutions in southern Africa.
Following the success of Bank Windhoek’s internationally recognised Green Bond in 2019, the bank obtained alternative sources of funding to the value of N$227 million through the Sustainability Bond on a private placement basis. sustainability bonds, commonly referred to as “use of proceeds bonds”, are unique, fixed-income instruments and investment vehicles for commercial and institutional investors. The proceeds are exclusively applied to finance or re-finance a combination of both green and social projects, in part or in full, new or existing. The projects will be benchmarked and aligned with the four core components of the International Capital Market Association’s (ICMA) Green Bond Principles (GBP), Social Bond Principles (SBP), and follows the ICMA sustainability bond guidelines. The four components for compliance include the use of proceeds, a process for project evaluation and selection, management of proceeds and impact reporting.
For investors, sustainability bonds provide an opportunity to support socially and environmentally responsible projects, along with the additional benefits associated with investing in an award-winning, highly regulated and “risk-free” instrument with a strong emphasis on transparency and impact disclosure. Projects eligible for funding include those focussed on renewable energy, energy efficiency, green buildings, sustainable waste management and a focus on sustainable agriculture and tourism, and investments into quality, accessible and innovative healthcare and education facilities. Bank Windhoek will evaluate social projects based on the primary objectives and the underlying impact of the project. The bank will report on the environmental and social effects of the projects financed in its annual sustainable bond impact report.
“The Covid-19 pandemic led to a steep increase in demand for innovative financial products like green and sustainable bonds that facilitate and promote a shift to a more sustainable economy. In Namibia, we experience global warming, and the effects of climate change on our local environment and businesses are evident. It is important to note that the proceeds of the Sustainable Bond will support a wide array of projects offering broad societal, economic and environmental benefits,” said Bank Windhoek’s Manager of Sustainable Investments and Deal Origination, Ruan Bestbier.
Bank Windhoek’s Managing Director, Baronice Hans, said: “Both the Green and Sustainability Bond issuances are milestones, not only for Bank Windhoek and Capricorn Group but Namibia as a nation. We unequivocally set the tone of our commitment to sustainable finance. We believe that the Green and Sustainability Bond issuances enable our clients’ sustainability requirements. These Bonds enable them to create a complete value chain, from raising favourable funding to offering green loans with attractive and competitive terms to facilitating the transition to a low-carbon and client resilient future.” “Sustainable bonds are a new addition to the cache of financial instruments. Along with established green bonds, sustainability bonds promote positive change in society and the environment and provide investors with a means of aligning their asset allocations with sustainability objectives in a meaningful way,” said Bank Windhoek’s Chief Treasurer, Claire Hobbs.
During 2020, sustainable debt issuances reached a record high of US$415 billion globally, up 60% from the prior year. Green bonds still dominate the sustainable finance market. However, other products, such as sustainability bonds, are playing catch-up, with the market increasingly becoming diversified in the low-interest-rate environment to meet growing investor and client demand.