Cyprus publishes Sustainable Finance Framework

The Finance Ministry’s Debt Management Office (PDMO) has published its Sustainable Finance Framework in view of its first-ever sustainable bond issuance.

“The publication of this Framework represents a significant step by Cyprus to align its national strategy for combatting climate change with its international debt capital markets funding strategy,” the PDMO said.

According to the PDMO, the key components of the framework outline the use of the proceeds secured from the issuance, the process for Project Evaluation and Selection, the management of proceeds and reposting. The framework also includes the evaluation by an external consultant.

It said that the Framework is aligned with the Green Bond Principles (“GBP”), the Social Bond Principles and Sustainability Bond Guidelines, issued by the International Capital Market Association (ICMA).

Furthermore, the framework also outlines the eligible expenditure covering a wide range of Green, Sustainable and Social projects.

Under the Framework, Cyprus is committed to report on any Sustainable Instrument issuance under this Framework in line with best market practice, including both allocation and impact reporting annually until such time as the net proceeds from each Sustainable Instrument issued have been fully allocated against Eligible Expenditures.

Moreover, PDMO published a Secondary Party Opinion issued by ISS Corporate Solutions stating that Cyprus’s Sustainable Finance Framework “is line with the International Capital Market Association's (ICMA) Green Bond Principles (GBP), Social Bond Principles (SBP), and Sustainability Bond Guidelines (SBG) and Loan Market Association (LMA) Green Loan Principles (GLP) and Social Loan Principles (SLP).”

The Cabinet of the previous government has approved a proposal submitted by the Minister of Finance on the issuance of a green and sustainable bond, authorising the Minister to proceed with all necessary preparatory work.

“Green/sustainable bonds constitute a financing tool which attracts particular importance from international investors and its use by Cyprus will offer multiple benefits, as it will provide access to new investors and will increase interest in international capital markets over the Republic’ issuances, widening the state’s financing options,” the Ministry said.