Fransabank SAL, the fourth-largest Lebanese bank, is the first Bank to issue green bonds in Lebanon and the Levant region to boost the green economy, promote environmentally-friendly projects and help fight climate change. This initial issuance of US$ 60 million series 1 green bonds will be followed by other series out of a global green bond program of US$ 150 million. Fransa Invest Bank (FIB), Fransabank’s investment and private banking subsidiary, acted as Placement Agent in connection with the offer and sale of Fransabank green bond program.
The International Finance Corporation (IFC), a member of the World Bank Group, an anchor investor in Fransabank’s green bond program, invested US$ 45 million in the first issuance and has board approval to invest another US$ 30 million in the program, bringing the total up to US$ 75 million. The European Bank for Reconstruction and Development’s (EBRD) subscription of US$ 15 million marks the institution’s first debt project in Lebanon and follows the US$ 50 million trade finance line signed with Fransabank on 15 March 2018 in Beirut.
The bonds will help Fransabank provide financing to a spectrum of eco-friendly projects in commercial energy efficiency, renewable energy and green buildings. It will support the transformation to a greener Lebanese economy in several sectors, including industry, manufacturing, universities and schools, among others.
Fransabank Chairman Adnan Kassar said: “This historic green bond program further strengthens our position as a pioneer in Sustainable Energy Finance in Lebanon. Our green bond issuance, the first in Lebanon and the Levant region, falls within our Green Strategy which we have been implementing for around a decade and that consists of supporting private sector investments in clean industrial energy efficiency, green buildings and renewable energy projects. IFC’s and EBRD’s subscriptions represent a clear vote of confidence from these prominent International Financial Institutions in our Bank and our country. Their participation will allow us to pursue our role in promoting environmentally-friendly projects, helping fight climate change and scaling up our lending for renewable energy projects in Lebanon.”
IFC’s investment is part of a strategy to create markets by encouraging investments in private sector projects while meeting a growing demand for renewable energy and energy-efficiency. “We expect that this project will be instrumental in further developing climate financing, not only in Lebanon but also in the broader region” said Mouayed Makhlouf, IFC Director for the Middle East and North Africa. “As the anchor investor in Fransabank’s green bond program, we aim to encourage more private sector investments in long-term energy efficiency and renewable energy projects, paving the way for more sustainable economic development and growth”.
EBRD’s Managing Director for the Southern and Eastern Mediterranean region, Janet Heckman, said: “We are very proud to be part of this landmark transaction, the first issuance in Lebanon and the Levant devoted exclusively to financing green projects. This is in line with our Green Economy Transition approach. Fransabank is an ideal partner for us as it has already demonstrated its clear commitment to the environment through its strong green lending program”.
Lebanon’s greenhouse gas emissions have increased by 28% since 1994 and continue to rise. This project will help reduce these emissions by at least 6,000 tons per year by 2022. The green bond issuance builds on IFC’s multi-year sustainable energy finance advisory work with Fransabank and is part of the bank’s “Go Green” strategy and falls within its commitment to the United Nations Sustainable Development Goal (SDG 13) on Climate Action. Over the years, IFC has supported Fransabank with a number of financial instruments, including several debt financing packages and a trade finance line. IFC’s green bond program helps funnel private investment into low-carbon projects. As of June 2017, IFC had invested US$ 5.8 billion in green bonds in 12 currencies. As part of its broader work on developing climate finance, IFC also advised Lebanon’s Capital Markets Authority on the development of guidelines for green bonds.
Green financing is core to EBRD’s strategy. The EBRD has been strengthening its efforts in this field with a record of €4.1 billion of investments under the Green Economy Transition approach in 2017, up from €2.8 billion in 2016. Green financing represented 43% of total investments in 2017, exceeding EBRD’s target to reach 40% of all investments by 2020.
Lebanon became an EBRD country of operations in September 2017, joining the Bank’s Southern and Eastern Mediterranean (SEMED) Group with Egypt, Jordan, Morocco and Tunisia, where the EBRD has been investing and engaged in policy reforms since 2012, as well as the West Bank and Gaza since May 2017. To date the Bank has invested over €6.8 billion in 179 projects across the SEMED region.
HE Mr. Adnan Kassar speech