Client challenge
Rand Water is a South African water utility that supplies potable water to the Gauteng province and other areas of the country and is the largest water utility in Africa.
Rand Water’s sustainability strategy is aligned to the guiding principles contained in South Africa’s National Development Plan (NDP) and the United Nation's Sustainable Development Goals (UN SDGs). To meet their issuance and sustainability strategy, Rand Water needed a trusted advisory partner that understands the key role that debt markets can play in funding and encouraging companies that contribute to sustainability.
RMB's solution
RMB Debt Capital Markets (DCM) and Sustainable Finance and ESG Advisory teams successfully arranged R1.2bn in sustainability-linked bonds for Rand Water. The transaction marks several African firsts, including being the largest South Africa Rand denominated bond issued, and the first ever to an African State-Owned company (SOC). The remainder of the issuance was a R500m 10-year bullet bond, taking the total raised for Rand Water to R1.7bn.
A key feature of the sustainability linked bonds (SLB’s) are the sustainability performance targets (SPTs) which link financial performance to sustainability performance. The coupon of these SLB’s are linked to Rand Water’s achievement of performance targets in relation to renewable energy generation, access to basic water infrastructure and gender equality. These SPTs directly address UN Sustainability Development Goals 7 (Affordable and Clean Energy), 6 (Clean Water and Sanitation) and 5 (Gender Equality).
Client benefits
Rand Water is set to join the likes of global and local pioneers by being the first state-owned company in Africa to issue an SLB. The objective of this bond is to link the coupon to Rand Water’s commitment to doing their part in implementing and achieving the Global Sustainable Development Agenda. Rand Water will provide RMB as Sustainability Agent in November 2023 and November 2025 with a sustainability certificate to indicate targets have been met and verified by a suitably qualified external auditor/consultant.
In line with Rand Water’s sustainability strategy, strategic objectives, and nature of operations the proceeds of the SLB will be used for general corporate purposes.
| Client | Rand Water |
|---|---|
| Size of deal |
R1.2bn Sustainability Linked Bonds |
| Sector |
State-owned companies and utilities |
| Capabilities |
Sustainable Finance and ESG Advisory |
| RMB's role |
Sole lead arranger |
| Country | South Africa |