Issuance of Corporate and Green Bonds in Mauritius

The guidelines by the FSC on the issuance of corporate and green bonds in Mauritius (effective 23rd December 2021), describes the practices and procedures to be adopted by issuers of corporate and green bonds. The guidelines should be read in conjunction with the provisions of the Securities Act 2005 (‘SA’), the Securities (Public Offers) Rules 2007, the Securities (Preferential Offer) Rules 2017 and any regulations, rules, circulars, notices that the Commission may issue from time to time and other applicable laws.

Issuers’ Threshold  

The guidelines on the Issuance of corporate and green bonds in Mauritius will be applicable to all reporting issuers under the Securities Act, 2005 satisfying the requirements of issuance of corporate and green bonds guidelines and undertaking a minimum size issue of MUR 100 million or equivalent.

The minimum size issue threshold of MUR 100 million or equivalent will not be applicable for issue of green bonds. Notwithstanding the above, issuers of green bonds instruments will still have to comply with the provisions of Issuance of corporate and green bonds guidelines.

Corporate Bonds

Overview of Corporate Bonds

For purposes of the guidelines, corporate bonds have been defined as “debt instruments denoting the obligation of an issuer/company to satisfy a holder’s claim to capital repayment and interest (and/or any other commitments entered into by the issuer)”.

Characteristics of a Corporate Bond

  • Denominated in MUR, USD, Euros or in any other currency acceptable to the Commission;
  • A tenure of more than one year (more than 365 days);
  • Fixed term with principal and any accrued interest/returns payable at maturity;
  • Fixed or variable rate of return rate;
  • Interest/return/profit to be paid periodically on certain specified intervals from the issue date, except for zero-coupon corporate bonds without periodic distribution; and
  • Excludes all government bonds.

Methods of Issue of Corporate Bonds

  • Public Offer – through the issue of a prospectus subject to the review and approval by the FSC, in line with the Securities Act, 2005 and the Securities (Public Offers) Rules 2007.
  • Preferential Offer –
    1. An offer or issue of securities that is a private placement;
    2. An offer or issue of securities that is made only to sophisticated investors;
    3. An offer or issue of securities only to related corporations of the issuer of the securities.

Eligible Issuers Requirements

An eligible issuer of corporate and green bonds may be a reporting issuer under the Securities Act and duly registered with the Commission satisfying the following requirements:

Net AssetsMUR 100 million or its equivalent, at any point in time, not earlier than 18 months prior to the proposed issue of corporate bonds.
Track RecordThe company has been in existence for at least three (3) years and has positive net profits after tax over the last twelve (12) months’ financial periods preceding the application for the issue.Debt/EBITDA for the last two financial periods preceding the issue maintained at a weighted average of 4 times or less.
Credit HistoryThe company does not have a history of recurrent default/late payments based on its MCIB or any relevant reports at the time of issuance.
Minimum Issue lot – Preferential OfferMUR 1 million
Minimum Issue lot – Public OfferMUR 100,000
Yields on the corporate and green bondsShall be rounded to 2 decimal points and prices shall be rounded to 3 decimal points
Notice to the commissionNot later than 10 days after the corporate or green bond offer ismade
Tenor of Corporate bondsThe corporate bonds shall be issued in maturities of more than 365 days.
TradingSecurities Exchange, Over the Counter (‘OTC’) on the secondary markets.Settlement for OTC trades of corporate and green bonds shall not exceed T+3.
BuybackAn issuer may buy back corporate or green bonds from current holders before maturity, subject to the approval of its Board of Directors.Buyback of a corporate or green bonds shall take place through the IPA.The buyback offer shall be extended to all investors in the corporate or green bonds issue.
TransfersThe corporate or green bonds shall be transferable.
The issuer shall recognize the investor whose name is last registered in the books of the IPA.

Green Bonds

Overview of Green Bonds

For purposes of the guidelines on the issuance of corporate and green bonds, a green bond is a debt instrument which facilitates capital-raising and investments into new and/or existing qualifying green projects which have environmental benefits and can mitigate risks associated with climate change.

Proceeds from Green Proceeds

  1. The proceeds of green bonds may only be used for the funding of qualifying green projects. Such projects should have clear environmental benefits which should be assessed and, where feasible, quantified by the issuer.
  2. The qualifying green project categories include, but are not limited to:
    • Renewable and sustainable energy;
    • Energy efficiency;
    • Pollution prevention and control;
    • Terrestrial and aquatic biodiversity conservation;
    • Clean transportation;
    • Sustainable waste management including recycling, efficient disposal of wastage;
    • Climate change adaptation;
    • Green buildings;
    • Environmentally sustainable management of living natural resources and land use;
    • Eco-efficient and/or circular economy adapted products, production technologies and processes; or
    • Any other category as may be specified by the Commission from time to time.

Project Evaluation and Selection

  1. Issuers engaging in green bonds issue should establish defined internal processes for the evaluation and selection of projects to be funded by the proceeds.
  2. Consequently, the issuer should ensure that, at minimum, the following information is disclosed to the investors and the Commission before issuance:
    • The internal process for evaluating how the proposed project is classified as a qualifying green project;
    • The expected environmental benefits of the proposed project;
    • The internal process around the selection and approval of the proposed project; and
    • Any green standards or certifications referenced in the proposed project.

Management of Proceeds

  1. Issuers should establish clearly defined internal mechanisms to manage and track the proceeds of green bonds. This relates to the traceability of the use of invested proceeds as well as the remaining uninvested balance.
  2. Issuers should ensure that the green bonds proceeds are used exclusively for the qualifying green projects defined before issuance and in compliance with these Guidelines.
  3. The intended types of temporary placement for the balance of unallocated proceeds should be made known to investors and the Commission prior to issuance

External Review

  1. An issuer should appoint an independent external reviewer to carry out a preissuance review on the credentials of the projects to be funded by the green bonds and the issuer’s compliance with the Guidelines.
  2. The independent external reviewer should assess and confirm if:
    • The projects to be funded by the green bond proceeds are eligible to be categorised as qualifying green projects;
    • The issuer has established appropriate internal policies, processes, controls and governance mechanisms to comply with the requirements of these Guideline; and
    • The issuer has complied with all the principles outlined in these Guidelines prior to the issuance of the green bond.
  3. The independent external reviewer should produce a Pre-issuance Review Report
    clearly stating the procedures performed as part of their review and the conclusion
  4. The Pre-issuance Review Report should be made available to the investors (in case
    of a preferential offer) and the Commission at least 14 business days prior to
    issuance. For public offer, this Pre-issuance Review Report should form part of the
    offer document.
  5. An independent external reviewer/certifier may be one of the following and having the relevant and sufficient expertise in the field of Environmental Social Governance:
    • An auditor duly registered with the Financial Reporting Council;
    • A credit rating agency duly licensed by the Commission or as recognised by the Commission; or
    • Any other service provider duly recognised by the FSC.

We at Blue Azurite are at your disposal to help you understand the purpose of the guidelines on the issuance of corporate and green bonds in Mauritius and the benefits that your business can derive from these guidelines.

Please contact us today on [email protected] | [email protected]  or +230 214 2237

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