By Goddy Egene
As Green Bond issuance set to gain traction in the country, the Nigerian Stock Exchange (NSE) is proposing a set of rules that will guide the listing of those bonds on the exchange.
Green bonds are special bonds issued to finance or re-finance in part or in full new and existing eligible environmental or climate projects.
The federal government kicked off the issuance of green bonds by raising N10.69 billion last December and this was expected to be followed by more issuances by the government and other corporates.
And to facilitate the subsequent listing of those bonds, the NSE has exposed rules to market participants for their contributions.
The rules are titled: “Rules for listing of green bonds on Nigerian Stock Exchange.”
The NSE proposed that the green bonds shall comply with the core components of the Green Bond Principles (GBP), while the issuer shall demonstrate transparency. According to the proposed rules, the issuer shall also comply with the Securities and Exchange Commission (SEC)’s regulations.
Among the listing requirements stipulate that: “Issuer shall state clearly in the prospectus that the bond; Issuer shall demonstrate that the proposed Green Bond shall comply with the GBP.”
The GBP and the principles are a set of voluntary process guidelines that recommend transparency and disclosure and promote integrity in the development of the Green Bond
The GBP were intended for broad use by the market: they provide Issuers guidance on the key components involved
Also, the proposed rules stipulate that proceeds shall be managed separately from other funds, and their use shall be monitored and reported throughout the tenor of the green bond.
“The bond prospectus and other relevant documentation shall clearly describe the purpose or projects towards
It added that the issuer shall open an escrow account specifically for the net proceeds of the issue and shall prudently manage the proceeds from the offer in order to ensure strict allocation to identified proposed projects.