The move to offer more environmental, social and governance (ESG) products in the financial space is becoming a global phenomenon and now the country of Kenya is hopping aboard the green bond train. On Monday, Kenya listed its first green bond on the Nairobi Securities Exchange, giving investors an opportunity to allocate capital into an environmentally-friendly fixed income security—the first of its kind in its 65-year history.
The green bond will help raise money to fund projects that focus on in renewable energy, energy efficiency, green transportation, and waste-water treatment. According to a Reuters report, the bond is valued at 4.3 billion shillings ($42.5 million) and was issued by Nairobi-based property developer Acorn Holdings.
“Our capital markets, our investors and indeed our government have started to take climate change seriously,” said Kiprono Kittony, a member of the board of the Nairobi Securities Exchange (NSE). “They will be listing the green bond also on the London Stock Exchange next week which is a first also to have a Kenyan shilling bond listed in the United Kingdom.”
This bond offering is especially important for countries like Kenya, which are susceptible to the impact of global warming. As a developing country, Kenya is one of the lowest polluters globally, but is still affected by global warming ramifications.
It’s another move forward for ESG offerings in the financial space and this is where the future is pointing.
“Eventually, all finance will be green,” said Patrick Njoroge, governor of the central bank.
High Yield ESG Fixed Income Options
An influx of capital into safe haven government bonds in 2019 have put a strain on Treasury yields, causing investors to search every corner of the bond market for that seemingly elusive yield. However, there are still high yield bond ETFs that are providing fixed income investors with the yield they desire.
The search for yield is certainly a global phenomenon given the low rates offered in government debt around the world. It opens the doors for ESG funds to shine by offering high yield bond options as in the case of BlackRock’s iShares High Yield Corp Bond ESG UCITS ETF (EHYD) and the iShares $ High Yield Corp Bond ESG UCITS ETF (DHYD).
Fund facts per a Morningstar report:
- Both funds will track the Bloomberg Barclays MSCI Euro Corporate High Yield SRI and Sustainable BB+ Bond Index and the Bloomberg Barclays MSCI US Corporate High Yield SRI and Sustainable BB+ Bond Index respectively.
- The fund will have an expense ratio of 0.50%.
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