NEA launches S$3b medium-term note programme to finance sustainable waste management projects

SINGAPORE'S National Environment Agency (NEA) has launched a S$3 billion multicurrency medium-term note programme and a green bond framework to finance the development of sustainable waste management infrastructure.

The first such project is the Tuas Nexus waste management facility, which is Singapore's first integrated facility to treat incinerable waste, source-segregated food waste and dewatered sludge.

"Issuance of green bonds will help develop green finance solutions and markets, supporting Singapore to become a leading centre for green finance in Asia, and around the world," the NEA said in a media release on Tuesday. It is the first statutory board to issue green bonds in support of Singapore's green finance market.

Minister for Sustainability and the Environment Grace Fu, who announced the medium-term note programme at the launch of the Plastics Recycling Association of Singapore on Tuesday, called it a "major milestone to catalyse the flow of capital towards sustainable development, and green our economy as part of the (Singapore) Green Plan".

NEA's green bond framework is aligned with voluntary guidelines of the International Capital Market Association's Green Bond Principles, under which proceeds from each issuance will be used to finance, or refinance, projects that meet specific eligibility criteria - with a two-year lookback period for refinancing projects.

Examples of other sustainable waste management projects eligible for such financing could involve material recovery in recyclables; waste processing and recycling; thermal efficient sludge incineration.

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Projects involving fossil fuel-based electric power generation will not be eligible.

A green bond working group has been set up to identify and propose eligible green projects, while a green bond committee comprising NEA's senior leadership will be responsible for reviewing and endorsing projects that comply with the framework. A board finance committee, comprising NEA board members, will approve eligible projects to be financed by issuances.

In addition, the green bond committee will review approved projects annually and endorse their compliance with the framework, until the bond matures.

The agency's finance team will track proceeds of the green bonds in a segregated bank account and periodically adjust the balance of the tracked proceeds to match allocations to the eligible projects. NEA expects to allocate net green bond proceeds to eligible projects within 24 months from the date of issuance.

Until the bonds' maturity, NEA will provide an allocation report detailing the list of projects and corresponding allocations; percentage of co-financing for projects funded by multiple sources; balance of proceeds yet to be allocated; types of temporarily unallocated funds placements and uses.

It will also log impact reports that track qualitative and quantitative environmental impact indicators resulting from each project, such as energy recovered, reduction in carbon emission, or volume of incineration bottom ash diverted from landfills.

DBS is the sole arranger for NEA's multicurrency medium-term note programme and adviser for the agency's green bond framework. The bank's global head of fixed income Clifford Lee said the framework forms a necessary benchmark in the market, as issuers and investors are looking out for a common and trusted standard to rely on.

NEA said it will announce the inaugural issuance of a green bond under the programme "in due course".

READ MORE

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• New Tuas Nexus facility can be poster child for regional foray into waste and water treatment