NSE, Luxembourg Stock Exchange sign agreement to deepen green bond market

10 Oct 2019, 12:00 am
Financial Nigeria

Summary

The agreement will enable the two exchanges to foster sustainable finance in their respective markets.

Oscar Onyema, Chief Executive Office, Nigerian Stock Exchange

The Nigerian Stock Exchange (NSE) and the Luxembourg Stock Exchange (LuxSE) have signed a Memorandum of Understanding (MoU) to promote cross-listing and trading of green bonds in Nigeria and Luxembourg. The MoU, signed yesterday by Oscar Onyema, CEO of Nigerian Stock Exchange, and Robert Scharfe, LuxSE’s CEO, during the annual meeting of the World Federation of Exchanges in Singapore, will enable the two exchanges to collaborate in order to foster sustainable finance in their respective markets.

According to a statement released by the NSE on Wednesday, the Nigerian green bond market received international recognition following the issuance and listing on the NSE of the ₦10.69 billion Federal Government Sovereign Green Bond in December 2017. This issuance sparked significant interest from the international and local capital market communities as it opened new investment opportunities, especially for domestic investors, to increase their exposure to financial instruments that generate social and environmental impact.

“With the MoU, issuers will enjoy the benefit of increased visibility through the cross-listing of their securities in Nigeria and Luxembourg,” said Onyema. “The partnership will further facilitate the growth of the green finance industry in Nigeria and ultimately deepen the Nigerian capital market through the mobilization of the foreign green capital needed to fund sustainable projects in Nigeria.”

A cross listing or secondary listing is a type of share listing that a company undertakes on stock exchange other than the primary exchange on which its security is listed. The requirements for secondary listings are often less stringent than the those for primary listings.

According to a report earlier this year by BloombergNEF (BNEF), a research company and subsidiary of Bloomberg, the global sustainable debt market grew by 26 percent to $247 billion in 2018, with green bonds issuance amounting to $182.2 billion or 74 percent of the market last year.  Cumulative green bond issuance since 2007 is estimated at $521 billion, per the Climate Bonds Initiative (CBI).

The green bond – also known as climate bond – market aims to reach a milestone of $1 trillion by the end of 2020. Climate bonds provide an avenue for environmentally-conscious investors to finance climate projects.

“Sustainable finance is becoming a truly global movement,” noted Scharfe. “By joining forces with other exchanges to promote and facilitate green finance, we strive to accelerate the sustainable finance agenda and increase awareness of and interest in investment projects that support the sustainable development that our world needs. We are pleased to cooperate with the Nigerian Stock Exchange to further strengthen sustainable finance in and between our markets.”  

LuxSE works closely with selected stock exchanges around the world to support the growth of sustainable finance. The exchange operates the Luxembourg Green Exchange (LGX), a platform exclusively dedicated to sustainable finance instruments. LGX now holds 50 percent global market share of listed green, social and sustainability bonds.


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