A Kenyan property developer has listed the first shilling-denominated green bond programme on the London Stock Exchange (LSE), marking a step forward in the bid to open up Africa’s local currency bond market to international investors.
Low global rates have bolstered demand for Kenyan and other frontier market local currency government bonds, but corporate risk has proved a stretch too far for most international investors, meaning that access to funding for African corporates is limited to local sources.
Recent developments in Kenya’s bond market may point to a way forward.
Acorn Holding’s green bond comes with a guarantee by development agency GuarantCo and is dual listed in London and Nairobi. The structure and international listing should alleviate the concerns over transparency, lack of available data and low liquidity that have kept many investors on the sidelines.
The proceeds will be used to finance the construction of six green-certified student properties in Nairobi. It is the first non-governmental green bond rated by Moody’s in Africa.
“An international listing in Kenyan shillings, or any other local currency, can not only help issuers raise investment without bearing foreign-exchange risk, but can also provide increased visibility and profile to set benchmark yields for future issuances,” says Shrey Kohli, head of debt capital markets and funds at LSE.
