1. Newsroom
  2. UBP Participates in Africa's First SDG Bond
Menu
Expertise 05.08.2021

UBP Participates in Africa's First SDG Bond

UBP Participates in Africa's First SDG Bond

The issuance of green, social and sustainability bonds by emerging and frontier countries is gaining traction. UBP expects further expansion of the market.


The investment universe of Emerging Market (EM) green, social and sustainability bonds has grown rapidly, and annual issuance has nearly tripled since 2016. Green, social and sustainability bonds aim at raising funds to address social, environmental and other challenges.

As the Covid-19 pandemic has been focusing attention on the need for sustainable economic recoveries across the world, we saw a significant rise in EM social bond issuance, and the EM social bond market grew five-fold in 2020. Emerging Market Environmental, Social and Governance (ESG) related issuance has increased in each subsequent year since 2015 in general, and at the end of June 2021 the year-to-date issuance of these instruments was at 90% of the previous all-time high for a full calendar year (2020).

Nevertheless, the EM sustainability bond universe remains relatively small when compared to Developed Markets (DM). We expect further expansion of this market with sovereign issuance also growing in response to social challenges, tightening climate policies, and shifting energy investment trends.

In 2020, the first EM sovereign bond with proceeds tied to Sustainable Development Goals (SDGs) was issued

So far, only a few EM sovereign issuers have turned to sustainable borrowing, primarily through green bonds, and they are principally the higher-income EM countries, such as Chile. In September 2020, however, Mexico issued the first EM Sovereign SDG bond. A second SDG bond was issued by Mexico in July 2021, which was closely followed by Uzbekistan paving the way for frontier markets with its inaugural SDG bond – the first ever by a frontier country.

Benin is the first African sovereign to issue an SDG bond

A couple of weeks after, Benin followed in their footsteps, becoming the first African nation to issue an SDG Eurobond. The use of proceeds are centred around four pillars of the national development plan, all oriented towards the achievement of SDGs. The four pillars are:

  • “Population” or Social (includes developing agriculture, access to drinking water, housing for the poor).
  • “Prosperity” or Economy (includes access to low-carbon, reliable and affordable energy).
  • “Planet” or Environment (sustainable infrastructure, conservation of biodiversity, restoration of forest).
  • “Peace/Partnership” or Governance (promoting heritage sites, educational sites).

Benin being the first African country to issue an SDG bond comes as no surprise to UBP. Since 2016, Benin has adopted a program of actions anchored to the SDGs to promote sustainable economic and social development, in line with the 2030 Agenda.

As a result of this initiative, the country was chosen by the United Nations in 2018 for the pilot phase of assessing the costs of achieving the SDGs and defining a resource mobilization strategy. And prior to issuing this bond, Benin partnered with the UN Sustainable Development Solutions Network (SDSN) chaired by the economist Jeffrey Sachs, to achieve a more effective monitoring and evaluation of the progress and efforts made by the Beninese government to achieve the SDGs. This partnership will improve the reporting capabilities on the use of SDG funds raised.

UBP views the increase in sustainable and SDG bond issuance as a welcome development for the emerging market fixed-income segment. Furthermore, UBP’s EM Debt team has a favourable view of Benin, and this bond in particular. Consequently, sovereign and frontier strategies managed by UBP participated in this inaugural African SDG issue.

EMERGING MARKET FIXED INCOME

Thomas_Christiansen_150x150.jpg
Thomas Christiansen
Head of Sovereign and Frontier Debt 
View his Linkedin profile

Babawale-Biola-150x150.jpg
Biola Babawale
Sovereign Strategist 
View her Linkedin profile

Expertise

Impact investing - Contributing to a more sustainable future

What are the key features of impact investing?

Actualités les plus lues

Expertise 10.06.2021

Covid-19: Restez informés avec l'UBP

Depuis l’apparition du coronavirus, l’UBP accompagne et soutient ses clients dans le contexte inédit de cette crise sanitaire mondiale. La Banque vous informe régulièrement de l’adaptation de ses dispositifs aux règles de précaution fixées par les autorités et partage avec vous les dernières analyses de ses experts sur les conséquences de la pandémie pour l’économie mondiale et les marchés financiers.

Expertise 29.07.2021

What ESG factors mean for bonds in EM

The creditworthiness of an emerging market country is often thought to be determined simply by its ability to service and repay debt.

Expertise 21.05.2021

Impact Report 2020

L’UBP publie son Impact Report 2020, présentant l’évolution de sa plateforme Impact sur l’année passée, avec notamment le lancement d’une stratégie centrée sur les marchés émergents.


A lire également

Expertise 21.09.2021

587 investors press COP26 governments on climate

The world stands at the beginning of a pivotal decade in which institutional investors and governments each have a responsibility to accelerate action to tackle the climate crisis. UBP is a signatory of the 2021 Global Investor Statement to Governments on the Climate Crisis.

Expertise 17.09.2021

UBP is an official signatory to the UK Stewardship Code

The UK Stewardship Code 2020 sets high stewardship standards for those investing on behalf of UK savers and pensioners.

Expertise 13.09.2021

China: the landscape has changed

China’s deployment of a growing range of tools across its policy arsenal highlights the sharp pivot that has taken place from the ‘To get rich is glorious’ era of Deng Xiaoping to the ‘Common Prosperity’ epoch being pursued in earnest by its current leader, Xi Jinping.