Kenya's first green bond raises Sh4.3 billion

Kenya's first green bond has raised Sh4.3 billion to build environmentally-friendly student houses, the issue’s lead arranger said yesterday.

So-called green bonds are fixed-income securities that raise capital for projects in renewable energy, energy efficiency, green transport and waste-water treatment.

The bond was issued by property developer Acorn Holdings after new rules were unveiled in February to guide the issuance of green bonds.

Stanbic Bank, which arranged the deal, said the bond was priced at an interest rate of 12.25 per cent and rated B1 Global, above the government’s rating of B2.

"The subscription book was well-diversified with significant interest from Kenyan domestic pension funds, commercial banks, insurance and reinsurance companies and non-resident funds,” the bank said.

The issue was looking to raise a minimum of Sh2 billion and a maximum of Sh5 billion.

It was structured as a “restricted public offer”, targeting sophisticated investors who received a 50 per cent guarantee from credit guarantees provider Guarantco on both their investments and the interest. Over-the-counter trading will be allowed.

The green bonds will help protect Kenya from the impact of extreme weather on the agriculture sector, said Nuru Mugambi, a director at the Kenya Bankers Association.