SYDNEY (Reuters) - Fiji will issue a $50 million “green” bond in coming weeks to help combat the effects of global climate change, the first developing country to do so, its prime minister said on Wednesday.
The Pacific Island nation is seen as particularly vulnerable to climate change, with some of its 300 low-lying islands susceptible to rising seas.
The bond will be the first to earmark the cash raised to address the issue, according to the World Bank.
The country will also use some of the proceeds to reduce its carbon dioxide emissions, Prime Minister Frank Bainimarama said in a speech.
“Changing weather patterns and severe weather events are threatening our development, our security and the Fijian way of life,” he said in a joint statement with the World Bank.
“By issuing the first emerging country green bond, we are also sending a clear signal to other nations that we can be creative and innovative in mobilizing funds.”
Such bonds are used to raise funds for environmental projects, though the sector has drawn criticism for only vaguely defining what constitutes a “green” investment.
Poland and France have also issued sovereign green bonds to raise funds for renewable power, subsidize energy-efficient buildings, tree planting and other environmental projects.
The bonds, which will be available in five- and 13-year maturities, will be priced on Nov. 1. They will pay coupons of 4 percent and 6.3 percent, respectively, according to a summary released by Fiji and the World Bank.
The issue comes three weeks ahead of a UN climate change conference in Bonn, Germany, which will be chaired by Fiji.
The global “green” bond market is expected to reach $134.9 billion in 2017, according to the World Bank.
Reporting by Sonia Feng; Editing by Kim Coghill