Recently, the African Development Bank (AfDB) launched a successful AUD 50 million 15-year Kangaroo Green Bond due March 2038. The Bond was sold to a single Japanese investor, Taiju Life Insurance Company, and marks the second Green Bond issued by the AfDB in the Australian dollar market since the inaugural 15-year Kangaroo Green Bond in 2016. The funds raised through this Bond issuance will support the Bank’s efforts in the areas of climate change mitigation and adaptation, including eligible green projects such as forestry conservation projects aimed at promoting the transition to green growth in Africa.
The Kangaroo Bond market, which has been in existence for over 25 years, continues to attract foreign companies seeking to tap into the Australian market. By issuing foreign Bonds denominated in the currency of the intended market, these companies hope to take advantage of attractive rates.
For investors looking to diversify their portfolios beyond their local borders, Kangaroo Bonds are a popular choice. These foreign Bonds, issued in Australian dollars by non-domestic entities such as corporations, financial institutions, and governments, provide investors with the opportunity to invest in foreign companies and earn incremental yield while eliminating the risk associated with currency exchange fluctuations.
Given that developing countries are expected to be the hardest hit by climate change, green bonds have become an important financing option for addressing climate change and environmental investments. Africa, with its unique biodiversity and ecosystems, is particularly vulnerable to climate change compared to other regions. Therefore, the transition to green growth in Africa is crucial, as evidenced by Japan’s “Africa Green Growth Initiative,” which aims to promote and attract investments in sustainable growth in Africa.
In promoting sustainable development in Africa, the AfDB’s ten-year strategy focuses on supporting African countries’ transition to green growth and promoting inclusive growth. By issuing Kangaroo Green Bonds, the AfDB is making a significant contribution to the global effort to combat climate change while also facilitating investment in green projects in Africa.