CSE in discussion with issuers for sustainable bonds
View(s):By Duruthu Edirimuni Chandrasekera
The sustainable bond market, now with blue and green bonds, can help Sri Lankan state-owned enterprises with liquidity issues in the long term, officials said.
Now that the Colombo Stock Exchange (CSE) has facilitated sustainable bonds, state-owned enterprises with liquidity issues can use this route to manage the cash flow, Chinthaka Mendis, Director General, Securities and Exchange Commission (SEC) said recently. He said this on Wednesday, at a Seminar on Unlocking Opportunities through Sustainable Bonds: Towards a Greener Economy Organised by SEC, and CSE in collaboration with the Asian Development Bank (ADB).
Sri Lanka can use the opportunity to issue green infrastructure bonds to raise funds to introduce a light railway system to the country, he said, elaborating to The Sunday Times Business and noting that this is because the government already has a well-structured railway system.
Chinthaka Mendis
“However, our railway stations need to be modernised and elevated up to the level of the metro stations found in other countries. That can be done without much investment and hassle by utilising the platform available at the CSE.”
As this is a revenue-generating project, it can be easily list on the CSE to raise the required capital, he said. This will be a sustainable revenue model in which investors will flock to invest which in turn, can bring down the transportation issues in the country to a greater extent. Further, he emphasised the importance of utilising renewable energy in transportation.
Mr. Mendis expressed his surprise at why the government institutions do not develop an idea to introduce a PPP with a similar revenue model that would enable the institution to run sustainably. He further stressed that such a mechanism would reduce the burden on government budgets while leading to a more inclusive participation from all spectrums of the country.
Faisal Salieh
Sustainable Bonds can raise funds for projects in renewable energy, energy efficiency, clean transportation, green buildings, wastewater management and climate change adaptation by the globally defined and accepted principles, rules and requirements that govern the issuance of Sustainable Bonds, Faisal Salieh, chairman, SEC, said at the seminar. He noted that the regulatory framework for sustainable bonds provides discerning investors with higher comfort levels by mandating an independent and professional verification and assurance process on the use of capital-raised performance monitoring and periodic reporting requirements.
He also added that though the framework has been put in place since 2023, the capital market is yet to witness these bonds and the challenge is how quickly can Sri Lanka socialise these bonds and attract ESG-conscious foreign investors while being mindful of the country’s default sovereign rating hurdle.
CSE officials told The Sunday Times Business that the operator is in discussion with issuers to launch sustainable bond issuances.
ADB Country Director Takafumi Kadono in his address noted that the sustainable bond market can play an important role in attracting private capital for investing in climate mitigation and adaptation, both of which are critically needed in Sri Lanka. “This is a tremendous opportunity for the country on which we must capitalise.”
He told The Sunday Times Business that developing a sustainable bond market will also deepen the capital market in the country.
He also said that sustainable bonds can help the country extricate itself from its economic crisis, set it on a strong, robust development and growth trajectory, and build the resilience a country and economy truly need.
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