JOHANNESBURG – Nedbank reaped the rewards of its first green bond on the JSE when investors bought R5.5 billion of them in an oversubscribed frenzy on Tuesday.
The JSE said the bank placed bonds worth R1.7bn last week to fund renewable energy projects. The issuance was three times oversubscribed by R3.8bn.
Bruce Stewart, the head of debt capital market origination at Nedbank CIB, said Nedbank will apply the investment proceeds from the bond to deliver financial support to solar and wind renewable energy projects.
“Nedbank has been a key supporter of, and participant in, the SA Department of Energy’s renewable energy independent power producer procurement programme (Reipppp) and to date we have funded 42 of the transactions, worth R40bn, across the four rounds of the programme,” Stewart said.
“So, this Renewable Energy Bond builds on our well-established experience in the renewables sector and allows us to extend our support of clean energy provision in South Africa through an innovative, sustainable development goals-focused capital market solution.”
Growthpoint Properties last year became the first corporate in South Africa to list in the green bonds segment of the JSE, with a R1.1bn green bond.
The JSE’s green bond segment was launched in October last year. It provides a platform for companies and other institutions to raise funds that are ring-fenced for low-carbon initiatives and for investors to buy securities that are truly green.
Donna Nemer, the director of capital markets at the JSE, said the bourse was pleased to be the venue of choice for Nedbank.
“Responsible investments have become a business priority for many organisations across the globe, and although this is the third green bond to list on our segment, we believe there is significant potential for growth in South Africa and on the continent,” Nemer said.
“The JSE has three bonds listed in its green bonds segment, with a market capitalisation of R5.10bn.”
South African banks have backed renewable energy projects to the tune of billions of rand as coal takes the back seat.
Last month, Standard Bank said it had set up a strict set of parameters to guide all future financing decisions on new coal-powered stations. The bank said it would not provide finance if the bids failed to meet the parameters.
The Minerals Council South Africa has estimated that Eskom would close four power stations - the equivalent of 8800 megawatts of installed capacity - over the next 10 years.
The council said 30 000 jobs would be affected directly, while more than 70 000 jobs could be lost indirectly, mainly in the transport and storage sectors.
Penny Herbst, director of strategy for Africa GreenCo, said investors familiar with the South African environment and those who wished to enter the market for the first time were awaiting the release of the revised Integrated Resource Plan for their next move.
“There are far too many players that are comfortable with the same structures for investment, selling to a state-owned enterprise with a government guarantee. What we really need at present is for investors to have a stake where their influence contributes to improving the electricity supply industry as a whole,” Herbst said.