Acorn lists first green bond on Nairobi, London bourses

Tuesday, January 14th, 2020 00:00 |
NSE 20-Share Index. Photo/PD/FILE

 Kenya yesterday listed its first green bond for trading on the Nairobi Securities Exchange (NSE) offering local investors a new avenue to reap fixed income security.

Worth Sh4.3 billion, the bond, which was issued by property developer Acorn Holdings last October to build student accommodation, will also cross-list at the London Stock Exchange (LSE) beginning January 20 as the firm banks on renewable energy to raise capital for projects.

Speaking during the official listing ceremony in Nairobi, NSE chief executive Geoffrey Odundo said the prospects for cross-listing looked very good.

Cross-listing involves listing a firm on a different bourse other than its primary and original stock exchange to enable listed shares trade in multiple currencies giving the company more liquidity, greater ability to raise capital and a higher corporate standing among its peers.

“Acorn is going to be our first cross-list and it’s going to be a good window for us to understand and get lessons out of it.

We expect more cross-listings with other exchanges, not just the London one,” said Odundo.

Odundo described Acorn’s green bond listing as a good investment opportunity saying it made it easier for anyone seeking to benefit from the new asset class at NSE to do so.

“It is a good opportunity for investors. The bond is at 12.5 per cent which is a good interest rate. For new issuers, this is a new asset class, so anybody who wants to raise money through the exchange can do it though the green bond programme,” he said.

In 2014, Kenya’s Atlas Development cross-listed on the LSE London bourse, led by its Emerging Markets division, wooing Kenyan companies to dual-list. Unfortunately, Atlas was later delisted on both exchanges after it ran into headwinds.

Reginald Kadzutu, an investment and economics professional at financial group Zamara Capital, says cross-listing is good for the issuing company especially now that the Kenyan bond market is struggling.

“It is a good thing as long as you have a stable currency. Ideally, it should filter down and help promote good corporate governance.

However, if you are going to spend all your money locally and do not need foreign currency there might be no need for cross-listing,” said Kadzutu.

Central Bank of Kenya governor Patrick Njoroge said the initiative was important since developing countries like Kenya were affected by global warming, despite being among the lowest environmental polluters. “Eventually, all finance will be green,” he said.

 Odundo allayed fears over the feasibility of bond issues in the country saying the exchange was working on the structures and ratings that govern bond issues to bolster investor confidence adding that the Acorn green bond was secured and had received ratings before being listed.

“We are going to go back to really getting the secured bonds structures right first and also the ratings to give more confidence to investors. That is going to help the markets recover,” he said.

The Acorn green bond has a B1 global rating, one notch higher than the sovereign rating, an Aa2.Ke national scale rating from Moody’s and a partial credit guarantee from GuarantCo (A1), a Private Infrastructure Development Group Company.

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