1 October 2024 01:40 am Views - 318
By Nishel Fernando
Sri Lanka yesterday marked a milestone by ringing the trading bell for its first-ever green bond issuance at the Colombo Stock Exchange (CSE), with DFCC Bank being the inaugural issuer.
More issuers are expected to follow as investor interest in sustainable finance continues to grow.
DFCC Bank, alongside the CSE, the Securities and Exchange Commission (SEC), Asian Development Bank (ADB) and other stakeholders, participated in the bell-ringing ceremony at the CSE floor to commemorate the listing of the first green bond issuance on the exchange.
The CSE introduced the listing of green bonds in April last year after the SEC, in collaboration with the ADB, established a policy and regulatory framework to support sustainable bonds.
DFCC Bank PLC issued senior, listed, rated, unsecured, redeemable, green three-year bonds to raise Rs.2.5 billion, which was oversubscribed. The bonds received an A- (lka) rating from Fitch Ratings.
CSE Chairman Dilshan Wirasekara stated that the exchange anticipates further sustainable bond issuances in the coming months. SEC Chairman Faizal Salieh emphasised that global funds are increasingly seeking opportunities to invest in sustainable debt instruments like green bonds to realign their investment portfolios.
“COP-29 highlighted the persistent large financing gaps, particularly in environmental finance as well as the vast shortfall in funding for the UN Sustainable Development Goals (SDGs). To bridge these gaps, we must mobilise significantly more private capital at a faster rate through capital markets globally and allocate these funds to projects, products and processes that positively impact the sustainability agenda. Investors are actively aligning their investments with ESG principles and contributing to the transition towards a climate-friendly, low-carbon economy. Green financing instruments are becoming integral to mainstream investment portfolios,” Salieh explained.
Sustainable bonds can finance projects in areas such as renewable energy, energy efficiency, clean transportation, green buildings, water and waste management and climate change adaptation.
ADB Country Director for Sri Lanka Takafumi Kadono pointed out that this initiative presents a unique opportunity to address Sri Lanka’s climate change adaptation needs, as the country is ranked among the most vulnerable to climate change globally.
Salieh further noted that the SEC, with technical assistance from the ADB, has established a policy and regulatory framework in line with the globally accepted standards for sustainable bonds, enabling both the Sri Lankan government and private sector to raise funds.
“Sustainable bonds must adhere to globally accepted principles, which include correct identification of the project, allocation of funds for the intended purpose, monitoring the use of funds, evaluating the project’s performance and ensuring an independent verification and assurance process,” Salieh added.
While the initial listing for an issuer may take time, he stressed that subsequent issuances for the same issuer can be completed more quickly.