Green Bond Round-up, Jan. 24: Indonesia launches green sovereign in bid to kick-start national issuance

The latest green bond developments

The Indonesian government is about to issue a sovereign green bond, and looks set to follow up with the world’s first sovereign green sukuk. Norway’s Cicero provided the second-party review for the framework of the deal – which is the first green bond out of the country – and rated it ‘medium green’ on its rating scale. It said the framework, which covers both green bonds and green sukuk, was in line with Indonesia’s National Determined Contribution. Cicero pointed out that, as the fourth most populous country in the world, Indonesia is a high emitter; but it is also “highly vulnerable to extreme weather because of climate change”. Christa Clapp, a Research Director at Cicero, said it was “looking forward to seeing the first sovereign green sukuk soon”. Indonesia’s debut deal comes hot on the heels of the release of national guidelines from the country’s Financial Services Authority. RI reported earlier this month that the rules are understand to state that only certain projects are eligible to receive proceeds from green bond issuance and that issuers must repurchase the notes or pay a higher coupon if they do not meet the green commitments. The sovereign framework excludes all new fossil-fuel based electricity generation capacity and expenditure to improve the efficiency of fossil fuel based electric power generation, as well as large-scale hydropower plants and nuclear–related assets. This will make it more aligned with European expectations around green bond financing than many bonds out of China, which could potentially finance ‘clean coal’.

The sovereign deal from Indonesia is expected to be second in size to France, which this week reaffirmed its plans to remain the biggest sovereign issuer by revealing its Eligible Green Expenditure for the year ahead: it has identified €8bn of green spending for 2018, which will be financed by Green OAT issuance. The country has €9.7bn outstanding in green notes already. It will issue details in the first half of this year on how it allocated proceeds last year, and how those projects/initiatives performed on an environmental level.


London-based Foresight Group has reached first close on its Italian Green Bond Fund dedicated to project bonds, which will be underwritten by the fund. The £2.8bn infrastructure and private equity specialist, which already runs dedicated renewable energy and energy efficiency funds, raised €70m, including investment from the European Investment Bank via its European Fund for Strategic Investments. Other backers were not disclosed but comprised “top tier Italian insurance companies, banking institutions and family offices”. It is the company’s first infrastructure debt fund, and will target small and medium renewable energy projects –including solar, wind, waste-to-energy, biomass and anaerobic digestion – and energy efficiency. “These projects typically have a debt capacity in the range of €5m to €15m and the pipeline of potential investments for the Fund is strong due to the fact that this niche Italian market is not currently served by banks or other sources,” said the company, which is aiming to raise €200m and complete a second close by the end of the year.“Bonds which are rated investment grade will be fully underwritten by the fund, fully amortising, and listed on the Milan stock exchange in the ExtraMot Pro segment and will target returns of between 6% and 8%”. Federico Giannandrea, Head of Foresight Southern Europe, said Italy’s green financing requirements were expected to boom in coming years on the back of the new National Energy Strategy in the country. “several sponsors have already initiated discussions” with the company about issuing through the fund, he added.

Russian metal giant Rusal has apparently scrapped plans to issue a green bond. The firm, which produces aluminium and rates itself as an environmental leader, announced last week that it would raise $500m in green notes. But, according to the FT, despite having an independent review on the green credentials, it came to market with a plain vanilla offering instead. The issuer has not commented on the decision, but it would seem likely that investor appetite for green notes from a metal producer may have stymied the deal.

The Luxembourg Stock Exchange and the Chinese Agricultural Development Bank have teamed up to create ‘an access scheme’ for sustainability bonds on the Luxembourg Green Exchange platform. The pair have signed a Memorandum of Understanding, which will result in domestic “green, poverty alleviation and sustainability bonds” from ADBC – China’s second largest policy bank – will be displayed on LGX, with investor information in English.


Mitsubishi UFJ Financial Group has successfully placed €500m of green bonds in its return to market. After its debut in 2016, the Japanese banking giant was slow to return to market, but RI revealed earlier this month that it had created a new second party review, suggesting it was planning another deal. Proceeds will finance renewable energy. Terms of the deal were not available at the time of publication.

Singapore-based renewable energy firm Sindicatum has sold a green bond in Indian rupees. The bond was sold in two tranches, totalling INR2.5bn ($40m) and with tenors of five and seven years. Proceeds will be used to finance and refinance renewables projects in India. The bonds are rated A1 by Moody’s and AA- by Fitch, and are guaranteed by GuaranCo – a development finance body based in London and part of the Private Infrastructure Development Group.


According to local media, Mexico has launched its own MX Green Bonus Principles – a set of guidelines for issuers wishing to sell green bonds out of the country. The principles are based on the Green Bond Principles and rules from the Climate Bonds Initiative. They are broadly in line with global expectations around minimum disclosure, green credentials of projects and management of proceeds. Link

NOTE: This article was amended to remove the $4bn figure from the headline and the body of the text, in relation to Indonesia’s green bond. This figure was based on a statement from Cicero which they have now withdrawn.