Standard Bank Group arranges City of Johannesburg's debut green bond with R1.46 billion debt issue
23 June 2014

Standard Bank Group has acted as co-arranger on the City of Johannesburg's green bond, the first listed green bond in the South African Debt Capital Markets. The bond will be used for environmental and social sustainability projects.

The City of Johannesburg issued the R1.46 billion bond, which is due in 2024 and pays an annual coupon of 10.18%, at a yield of approximately 185 basis points above the R2023 government bond. Standard Bank arranged the sale of the instrument, which will be used to fund projects ranging from efforts to reduce greenhouse gasses to renewable energy initiatives, in partnership with black economic empowerment firm, Basis Points Capital.

"Standard Bank is in the fortunate position to possess a wealth of internal knowledge and intellectual capital on sustainable initiatives and we were able to deploy that intellectual property in structuring this bond," said Ms Zoya Sisulu, Debt Primary Markets, at Standard Bank. "Our credentials in the green financing space were the main reason that the City of Johannesburg partnered with us."

The City of Johannesburg hosted the fifth biennial C40 Cities Climate Leadership Group Mayors Summit in February this year in an effort to advance urban solutions to global climate change through international collaboration and dialogue. The C40 Cities Climate Leadership Group (C40) is a network of the world's megacities committed to addressing climate change.

By issuing its debut green bond, the City of Johannesburg has become the first member of the C40 cities across the world to issue such an instrument. The funds will be used to fund sustainable projects and conduct efficiency upgrades across four key areas of the city's infrastructure: power, water, parks and transport.

"This is the first green bond to be listed in the 2013/2014 financial year and marks a historic occasion, as Jo'burg is the first city in the C40 Cities Climate Leadership Group to issue the Green bond," said Executive Mayor of Johannesburg, Parks Tau. "This clearly demonstrates investor confidence in City of Johannesburg and commitment to environmental stewardship and climate change, while receiving a market related financial return."

Standard Bank Group received bids for the bond totaling approximately R2.2 billion, or roughly 1.5 times the amount available. The bond was sold to domestic investors who exhibited a strong appetite for an asset class that encapsulated the principles of environmental, social and government responsibility. "Green bonds are still a developing asset class across the globe but appetite for these instruments is strong and increasing given the number of investors who are mandated to have a certain amount of exposure to environmentally benchmarked instruments," said Ms Sisulu. "We believe there is tremendous scope for further issuance of such bonds by other metropolitan districts in South Africa, particularly those wishing to deploy capital towards environmentally sustainable projects."

Standard Bank Group was included on the Emerging Markets Index of the 2013 Dow Jones Sustainability Index and was ranked as Africa's greenest bank and the 12th greenest bank globally in the2013 Bloomberg Markets Top 40 Greenest Banks rankings. Standard Bank was also awarded Sustainable Bank of the Year for the Africa/Middle East region in the Financial Times/ International Finance Corporation Sustainable Finance Awards 2013.

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