Georgy Paresishvili, Chairman of the Board of the Republican Stock Exchange "Toshkent," praised the recent issuance of "green" bonds as a triumph. These bonds, designed to finance environmentally friendly projects, have garnered significant investor interest, resulting in lower interest rates than conventional bonds.
Uzbekistan debuted in international sovereign bonds by issuing "green" debt securities. The successful placement attracted 4.25 trillion soums over three years, with an annual interest rate of 16.25%. Paresishvili explained that the issuance of "green" bonds was prompted by the necessity to repay previous debt amounting to UZS 1.9 tn ($347.79 mn), due at the end of November. He emphasized that this approach is a common global practice, representing a classic refinancing strategy.
"This is a classic refinancing of previous bonds by issuing new bonds, which is a common practice worldwide," he stressed.
The popularity of "green" bonds stems from their appeal to investors seeking to support environmentally focused initiatives. Paresishvili highlighted that attracting investments through these bonds is cost-effective due to the presence of purpose-driven investors. Notably, the yield on Uzbekistan's "green" bonds stands at 16.25%, lower than the rates on domestic government securities.
Paresishvili elaborated on the current interest rate environment, noting that today's interest rates for bond issuances hover around 17.5%. In comparison, the successful placement of the "green" bonds at 16.25% is a testament to its effectiveness. Paresishvili discussed the risks associated with foreign bond investment, including country-specific, geopolitical, economic, currency, and credit risks. Institutional investors, particularly specialized investment funds, have displayed significant interest in Uzbekistan's "green" bonds.
The funds raised from these bonds will be directed towards various "green" projects, such as the construction of solar and wind power plants, energy-saving technologies, house heating improvements, and emissions reduction. Paresishvili emphasized that failure to allocate the funds to their intended purpose would result in losing "green" bond status, rendering them ordinary bonds.
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