MarketSmith/SEC/News/Friday, 10th November 2017

PROPOSED RULE ON GREEN BONDS

1.0 Name/Citation of the Rule: Green Bonds

1.1 Definition of Terms

“Green Bond” A Green Bond is any type of debt instrument, the proceeds of which would be exclusively applied to finance or re-finance in part or in full new and/or existing projects that have positive environmental impact.

2.0 Qualification

To qualify as a green project, the monies shall be invested in one or more of the following:

a) Renewable and sustainable energy

b) Clean transportation

c) Sustainable water management

d) Climate change adaptation

e) Energy efficiency

f) Sustainable waste management

g) Sustainable land use

h) Biodiversity conservation

i) Any other categories as may be approved by the Commission from time to time.

3.0 Conditions for approval of a Green Bond

In addition to the general registration requirements for debt issuances as stated in the Rules and Regulations of the Commission for States, Local Governments, Government, Corporate and Supranational agencies, an issuer of a Green Bond shall file:

i. A feasibility Study and Report stating clearly, the measurable benefits of the proposed Green project or Assets such as Green House Gas reduction, reduction of water use and reduction of harmful emissions.

ii. A prospectus which shall include project categories, project selection criteria, decision-making procedures, environmental benefits, use and management of the proceeds.

iii. A letter from the issuer committing to invest proceeds of the bond in green project(s) or assets;

iv. An independent assessment or certification issued by a professional certification authority or person approved or recognized by the Commission.

v. Any other documents that may be required by the Commission

4.0 Utilization and Management of Proceeds

i. The net proceeds shall only be utilized for the purpose stated in the approved offer documents and shall be tracked as stated in the approved internal policy of the Issuer which shall be disclosed in the offer documents.

ii. An escrow account shall be opened specifically for the net proceeds of the offer.

iii. The proceeds shall be domiciled with the Custodian and the Trustees shall ensure that the proceeds are used for the purpose stated in the prospectus.

iv. The issuer and the Trustees shall be the signatories to the escrow account.

v. The issuer shall invest proceeds in green projects within the given timeframe prescribed in the prospectus. Unallocated proceeds shall be invested in money market instruments with investment grade rating and this shall be disclosed in the offer documents.

5.0 Reporting

i. The issuer shall publish the utilization of proceeds in at least two(2) national dailies on an annual basis which shall contain the details of the key factors capturing the environmental impact of such investments and the same shall be disclosed in its annual report and website

ii. The issuer shall publish an assessment report issued by an independent professional assessment or certification agency on its website or other media and conduct and report annual follow-up assessments of the green projects and associated environmental benefits throughout the tenor of the bond.

6.0 Refinancing

Where the issuer proposes to utilise a proportion of the issue proceeds of the issue of Green Bonds, towards refinancing of existing green assets, the Issuer shall clearly provide in the offer document the details of the portfolio/assets/projects which are identified for such refinancing. CLICK TO DOWNLOAD FULL PDF