Green bond listing this year

The Jamaica Stock Exchange, JSE, expects the first green bond listing this year.

The JSE expects to become the first stock exchange in the English-speaking region to facilitate the issuance of green and other sustainable bonds.

The exchange, however, remains silent on the details of the first listing.

The JSE on Tuesday launched its guidelines for raising environmental and sustainable bonds, previously reported on by the Financial Gleaner a week ahead of the unveiling of the guide.

One participant at the launch revealed discussions with overseas entities.

“Successful green bond listings will require large diverse and reputable partners and we have begun those engagements with those stakeholders,” said Wayne Wray, a director of Innovative Energy Group Limited, who was invited to speak at the launch.

Innovative Energy Group is the transformed operation of Ciboney Group, from a shell company that had its beginnings in the hospitality sector to a renewable energy company at its acquisition last year by investors, which included Wray.

“Economies of scale, diversification of projects, and location will be essential to attract the appropriate cost of capital to secure the expected return on investment,” Wray added.

Green and sustainable bonds are designed to positively impact the society or the environment. On the financing side, these bonds are attractive to issuers as it generally costs them less to finance. That’s because institutions and hedge funds can pool government and donor-backed funds at concessionary rates to fulfil climate change objectives.

“It is now up to you to take advantage of this infrastructure. There are hundreds of billions of dollars being managed in the financial capitals of the world looking for green projects,” said Minister of Finance Dr Nigel Clarke at the launch of the bond guidelines. “And here in Jamaica, we have our green social sustainable platform backed by multilateral financial institutions that provides a framework to seek financing,” the minister said.

Technocrats last year said Jamaica should see flows of US$6 billion in green investments over 25 years. A green bond market would facilitate some of that business.

“We will need credible, dynamic, financial intermediary entrepreneurs to take advantage of this opportunity,” said Clarke.

“From the financing side, it usually comes at a lower service cost than traditional loans,” he added.

The JSE already operates a bond trading platform, along with JMD and USD-denominated equity platforms.

Small islands disproportionately impacted

Small islands like Jamaica are impacted disproportionately by climate change due to limited resources, said JSE Group Managing Director Marlene Street Forrest at the launch. The global challenges include more violent weather, a changing climate, environmental degradation, and social inequity.

“These factors significantly impact small islands like ours because of geographic location and limited resources. The financial sector plays an important role in ensuring that we mitigate the risk by providing funding and governance for green initiatives,” Street Forrest said.

The infrastructure for the green bond market is in the final stages of being built out along the lines set out in the green bond guide, said Street Forrest. Regional rating agency CariCRIS will rate the bonds prior and during the life of the debt, she said.

“So the infrastructure is taking its time to come together,” she said. “I can also report that there are prospective issuers, not only in Jamaica, but in the region. They are excited about the opportunity to issue green bonds.”

In 2021, the Jamaican government, with the assistance of the Green Climate Fund, launched the green bond project, with responsibility for its implementation placed in the climate change division in the Ministry of Housing, but with the JSE as the executing agency.

“There is a race to see who will list the first green bond, and we will take on that challenge. It will happen this year,” declared Andre Gooden, JSE’s group business development manager, in his role as moderator of the event. “I will not tell you who will be the first, but I know who is the favourite,” he said.

steven.jackson@gleanerjm.com