Fiji starts work on first blue bond

2 min read
Daniel Stanton

The Republic of Fiji is working on its first blue bond issuance, according to an official from the Pacific Island country's central bank.

In 2017, Fiji became the first emerging market to sell a sovereign green bond, raising 100m Fijian dollars, or around US$50m, from a five-year 4% tranche and a 13-year 6.3% tranche.

"Given our experience, we thought that we should look at other climate bonds such as blue bonds," said Apenisa Tuicakau, manager for domestic markets at the Reserve Bank of Fiji, who was speaking at a webinar hosted by the Climate Bonds Initiative on Tuesday. "We are working on that at the moment. The issue is how we can identify whether projects are green or blue."

Tuicakau said that the 2017 green bond offering had been almost twice subscribed and had drawn more than the usual number of investors for a government bond issue. Typically there are only three or four investors in a government bond issue, but the green bond drew more than three times that number, he said.

"What makes us unique from other countries is that the majority of funds we receive from green bonds have been channelled to adaptation projects, and that's because of the fact of climate-induced disasters on our shores," he said.

In 2016, tropical cyclone Winston passed directly over Fiji, causing economic losses equivalent to almost a third of the country's GDP. Almost 20% of the region's 10 million people could be displaced by climate change by 2050, according to the World Bank.

Fiji used proceeds from the 2017 green bond for projects aiming to achieve 100% renewable energy and reduce its CO2 emissions in the energy sector by 30% by 2030.

Tuicakau said that ESG bonds enabled climate-related adaptation projects to be packaged into a format that can more easily be sold to investors.

"We are able to finance adaptation projects which may never be financed by private financiers," he said.