Gabon May Sell Africa’s Biggest Ever Sovereign Green Bond

(Bloomberg) -- Gabon is considering selling Africa’s biggest ever sovereign green bond to fund the construction of hydro-power plants, the head of the country’s sovereign wealth fund said. 

While the bond will be between $100 million and $200 million in size, the world’s second most forested country and its sovereign wealth fund will first focus on finalizing selling 90 million carbon credits based on emissions absorbed by its trees, Chief Executive Officer Akim Daouda said. It may also wait for better market conditions, he said.

“We are looking at raising a green bond to continue investing in our renewable-energy hydro dams,” Daouda said in an interview in London. “We have all seen the markets these days and it might not be the right time to raise some funds.”

Green-bond sales from governments have slowed in 2022 after exponential growth in recent years, as the need for borrowing cools from the spike seen during the Covid-19 pandemic. Investors have also turned more cautious given volatility following Russia’s invasion of Ukraine, with ethical bonds under-performing conventional debt in a broad market sell-off.

Global issuance has totaled $71.4 billion this year compared to $92.3 billion in 2021, according to data compiled by Bloomberg Intelligence. Still, this year’s sales are more than four times what was raised through the securities in 2018.

In Africa, there have been few sovereign sales of the instruments. Nigeria sold local-currency green bonds to raise a total of 25.69 billion naira ($58 million) in 2017 and 2019 to fund energy and transport projects, as well as conservation, according to research from the ODI think tank funded by UK government agencies. Other sales have been primarily by municipalities or companies. 

Gabon is looking to make money from preserving and utilizing its forests sustainably as it strives to wean itself off the oil revenue that accounts for almost all of its exports. 

The central African nation is also considering a transaction in which The Nature Conservancy will buy $700 million of its eurobonds and then sell debt back to the government at a lower interest rate in exchange for spending on marine conservation, a so-called blue bond.

--With assistance from .

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.