Anglo-South African finance institution, Investec, has announced the issuance of its first green bond at R1 billion. Backed by the bank’s flagship renewable energy projects in South Africa, the bond was 3.8 times oversubscribed.
Investec’s green bond was issued according to its DMTN bond programme. The company says the oversubscription of the bond highlights a healthy appetite among institutional investors to make a positive impact in terms of their environmental, social and governance (ESG) commitments.
According to Leanne Large, Head of Loan Distribution and Syndication at Investec Bank Ltd, institutional investors are becoming more aware of the risks of climate change to their portfolios and are having to disclose these.
“There’s also greater pressure being brought to bear from their stakeholders to make a positive contribution through their environmental, social, and governance (ESG) policies and related financing. Green bonds thus fulfil an important role within the fixed-income component of an institution’s portfolio, especially where there is a reference to bankable, cash-generative projects,” said Large.
Green Bond market surging
Investec’s green bond was issued in line with the Green Bond Principles of the International Capital Markets Association (ICMA), a global association of debt securities issuers as well as the Investec Sustainable Finance Framework. The principles seek to support the financing of environmentally sound and sustainable projects that foster a net-zero emissions economy and protect the environment.
In issuing the green bonds, Investec joins the growing number of countries, corporates and financial institutions that are raising capital to have a positive environmental impact and support the green energy transition.
According to the World Economic Forum (WEF), annual issuance of green bonds is expected to exceed US$1 trillion in 2023, double the amount issued last year. Considering that the global bonds market is worth some US$130 trillion, there’s significant room for green bonds to grow within the fixed income asset class.
The world’s first green bond was issued in 2007 by the European Investment Bank, followed a year later by the World Bank. Today apart from governments and government-backed agencies, some of the world’s leading companies have also issued green bonds and with this bond, Investec joins the prestigious list of issuers.
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