STATEMENT BY CITY’S EXECUTIVE MAYOR, PATRICIA DE LILLE
As part of our efforts to prioritise climate action projects to protect residents against the impacts of climate change, the City of Cape Town is in the process of issuing a bond up to the value of R1 billion which it will accredit through the Climate Bonds Initiative’s Standard.
This third party accreditation will enable us to market the bond as a true Green Bond.
In developing the associated Green Bond Framework, we have identified a suite of eligible projects which will be funded through the proceeds of the bond.
The projects to be funded by the Green Bond are a mix of adaptation and mitigation initiatives, all of which are aligned to the City’s Climate Change Strategy.
The projects include:
– procurement of electric busses
– energy efficiency in buildings
– water management initiatives which includes;
- water meter installations and replacements
- water pressure management
- upgrade of reservoirs
– sewerage effluent treatment
– rehabilitation and protection of coastal structures
While the projects which have been earmarked for funding only represent a subset of the activities that the City delivers in this space, the fact that the City can raise a bond of this magnitude demonstrates that we are serious about delivering projects and programmes to address climate change and find innovative ways to diversify our project financing mix.
We are hopeful that the investor response will be favourable, given our strong credit rating (national scale credit rating of Aaa.za) and our credibility in delivering meaningful initiatives to enhance the sustainability of our City.
In order to raise a Green Bond the City needs to comply with the JSE’s Debt Listing Requirements.
On 30 May 2008, The City issued a R7 billion Domestic Medium Term Note (DMTN) programme to facilitate three bonds issued between 2008 and 2010 to a total value of R4,2 billion.
Due to a positive working capital position as well as a R2,38 billion concessionary loan taken out with the AFD during 2013, there was no need for the City to further draw down the balance of its DMTN programme.
The City intends to raise the Green Bond during July 2017 and requires Council’s approval to update the Programme Memorandum in relation to the DMTN in order to comply with the JSE’s Debt Listing Requirements prior to following a process in terms of section 46 of the Municipal Finance Management Act (MFMA).
A report on the update of Domestic Medium Term Note programme in order to issue a Green Bond served before the Mayoral Committee this morning, 20 March 2017.
The Mayoral Committee subsequently approved the recommendation that the City’s Current Programme Memorandum in relation to the Domestic Medium Term Note (DMTN) programme, dated 30 May 2008, be updated in order to comply with the JSE’s Debt Listing Requirements, and an amended Programme Memorandum be issued to facilitate the issuing of the Green Bond in terms of section 46 of the MFMA.
The Mayoral Committee further approved a recommendation to the extent required that any amended agreements and documents in relation to the Programme Memorandum be entered into and the City Manager be authorised to sign.
The report will be referred to full Council for a decision at the end of this month.