Egypt’s Commercial International Bank (CIB) said on Wednesday it has opened subscription for the first green bond to be issued in the local market after having received initial approval from the Financial Regulatory Authority (FRA) on 21 June.
The issuance is the first of its kind for Egypt’s private sector.
The private placement is valued at $100 million in non-callable fixed rate bonds.
The tenor of the issue is five years and proceeds will be used to fund a portfolio of green loans extended by the CIB to its corporate as well as small and medium-enterprise (SME) clients.
They will also be used to fund the CIB's green building capital expenditure for up to 20 percent of the proceeds, according to the CIB.
The International Finance Corporation (IFC), a member of the World Bank Group, will subscribe to the full value of the issue.
The bond proceeds are expected be directed to various categories of climate-supporting initiatives, including green buildings, energy efficiency, renewable energy, water and wastewater management, and clean transportation, said the CIB.
The issuance is part and parcel of the CIB's mission to support clients looking to make sustainable investment choices and will also entrench the cost of environmental impact into the fabric of its credit policy and decision-making with respect to lending and investment decisions, the bank added.
Meanwhile, the CIB announced it is set to publish its Green Bond Framework this week, which sets out the parameters for the use of proceeds, eligibility, selection criteria for the projects funded by loans extended to clients, the management of proceeds, as well as reporting and impact evaluation.
The framework was audited by Moody's affiliate Vigeo Eiris and is compliant with the Green Bond Principles published by the International Capital Markets Association in 2018, the bank stated.
“As a founding signatory of the UNEP-FI Principles for Responsible Banking, the issuance also underscores the bank's commitment to strategically align its business with the sustainable development goals (SDGs) and the Paris Agreement on Climate Change,” said the CIB.
The CIB noted that it is committed to ensuring its reporting aligns with numerous sustainable standards, including the Global Reporting Initiative, to provide concrete quantification of greenhouse gas reduction strategy and moving to a net-zero carbon economy over the medium term.
Egypt managed to secure finances with a total of $1.9 billion from multilateral and bilateral international partners, Minister of International Cooperation Rania Al-Mashat stated at the CIB’s green bonds issuance ceremony on Wednesday.
She stressed that green, sustainable, and social bonds have emerged as one of the key instruments for countries to recover from the pandemic with the leading role of the private sector.
“The CIB’s green bonds issuance today, which is financed by the IFC, is a model of the private sector engagement in the recovery process in Egypt and the role it can play in this process," said Al-Mashat.
On the sovereign level, Egypt issued its green bonds, the first of their kind in the MENA region, in September and offers them at the London Bourse with a total worth of $750 million.
The deal offered investors a 5.25 percent yield.