NEW YORK, Aug 2 (IFR) - Central American development bank Cabei priced its first Green bond this week, a four-year denominated in South African Rand and targeted at Japanese accounts in the retail Uridashi market.
The bank will use proceeds from the R1.032bn (US$73.861m) deal to fund renewable energy projects, qualifying the trade as a Green bond.
Sole lead Daiwa is distributing the paper largely among Japanese retail accounts. It priced at 99.96 with an 8.4% coupon, roughly the mid-point of price talk of 5.3%-11.3%.
“These are socially responsible investors, so it was a perfect opportunity,” Ricardo Rico, head of capital markets at the Honduras-based bank, told IFR.
“Our strategy includes environmental and social issues, and we have invested a lot of money in green projects.”
Higher-rated deals denominated in EM currencies have won favor with accounts struggling to bolster portfolios at a time when trillions of dollars of government debt is trading at negative yields.
The Rand has been weakening against the dollar this month ahead of local elections on Wednesday, but at 13.99 remains relatively strong versus the 15.42 level seen on June 27.
Cabei, rated A1/A/A, made its debut in the Uridashi market last year with a Turkish lira bond, and had considered staying with the currency this time round.
But it dropped the idea following last month’s failed coup attempt in Turkey.
“We swapped back to US dollars and got very low funding cost,” said Rico. “It is very cost-competitive.”
The bank still needs to raise some US$400m-US$500m in 2016 and is looking at markets as diverse as Taiwan, Mexico, Switzerland as well as private placements in euros and dollars, he said. (Reporting by Paul Kilby; Editing by Marc Carnegie)