Cape Town issues green bond

The City of Cape Town will issue a green bond of up to R1bn, to be certified by the Climate Bonds Standard.

Green or climate bonds are issued by governments or companies to finance measures to mitigate or adapt to climate change.

Johannesburg became the first municipality in SA to do this in 2014, when it listed a R1.46bn green bond on the JSE.

Cape Town has developed a Green Bond Framework, in which it identified a suite of eligible projects to fund with the proceeds of the bond.

The projects are a mix of adaptation and mitigation initiatives, all of which are aligned to the city’s climate change strategy.

They include procurement of electric busses; energy efficiency in buildings; water management initiatives, including water meter installations and replacements, water pressure management, upgrades to reservoirs, sewage effluent treatment, and rehabilitation and protection of coastal structures.

Cape Town mayor Patricia De Lille said this week: "While the projects earmarked for funding represent only a subset of the activities that the city delivers in this space, the fact that the city can raise a bond of this magnitude demonstrates that we are serious about delivering projects and programmes to address climate change and find innovative ways to diversify our project financing mix."

De Lille said she was hopeful the investor response would be favourable, given Cape Town’s strong credit rating.

In order to raise a green bond, the city needs to comply with the JSE’s debt listing requirements. These include council approval in terms of the Municipal Finance Management Act.

De Lille said the city intended to raise the bond during July.

The mayoral committee received a report on Monday on the update of the domestic medium-term note programme in order to issue a green bond.

The mayoral committee has now approved an update to the programme to facilitate the listing of the green bond.

The report will be referred to the full council for a decision at the end of March.