On September 16, Uzbekistan Mortgage Refinancing Company, successfully issued green corporate bonds on the Republican Stock Exchange Tashkent. The announcement was made by Ganieva Guljahon, the Head of Listing and Issuer Relations Department Tashkent Stock Exchange. This issuance represents a significant advancement in the sustainable finance landscape of Uzbekistan.
The total volume of the bond issuance reached UZS 50bn (approximately $4mn). Each bond has a nominal value of UZS 1mn ($79) and a coupon rate set at 18% per annum. Payments on these bonds will occur quarterly over a five-year term, providing a steady income stream for investors.
The successful placement of these bonds was facilitated by recent amendments to the Rules for the Issuance of Securities and the State Registration of Securities Issues, which were revised in June 2024 to support sustainable finance initiatives. The regulatory framework was developed by the National Agency of Perspective Projects (NAPP) with assistance from World Bank experts, ensuring compliance with international standards. Moreover, the Alkes Research was brokering the transaction.
Marat Nurmamatov, CFO of UzMRC, stated, “The regulator recently introduced amendments to its Regulation with regards to the issuance and registration of particularly ‘green’ bonds. UzMRC green bonds are the first ‘green’ issuance in Uzbekistan according to the Regulation on issuance and registration of securities.” This adherence to global standards positions Uzbekistan favourably in the growing market for sustainable finance.
The bonds have been verified by the AIFC Green Finance Centre and align with the Green Bond Principles established by the International Capital Market Association (ICMA). Proceeds from the green bonds will be utilized to finance and refinance green loans provided by commercial banks. These loans focus on projects that incorporate energy-efficient materials and practices in construction and renovation.
Nurmamatov noted, “The proceeds from the issuance will be exclusively allocated through partner banks to finance and/or refinance the green renovation of existing buildings, thus increasing their energy efficiency.” This initiative is expected to contribute significantly to Uzbekistan’s environmental goals, particularly in enhancing energy efficiency within the construction sector.
The response from both local and international investors has been positive. Following the adoption of Uzbekistan’s Taxonomy of a national green economy, financial institutions are increasingly aware of and committed to green financing. Nurmamatov highlighted that “financial institutions in the country are becoming more and more aware and committed to green financing and attempting to incorporate green financial instruments into their portfolios.”
Two additional factors enhance the attractiveness of UzMRC’s bonds: they are regarded by the Central Bank of Uzbekistan as High-Quality Liquid Assets and are issued at competitive interest rates. This has further encouraged interest from international investors.
The issuance of these green bonds marks a pivotal moment for Uzbekistan’s financial market, as it represents the first official placement of such securities domestically. It positions UzMRC as a key player in both the domestic debt market and the emerging sustainable finance sector.
The CFO at UzMRC expressed gratitude to the National Agency for Perspective Projects for their guidance, emphasizing, “We would like to take this opportunity to express our sincere gratitude to the National Agency for Perspective Projects who provided us with guidance and support in shaping this green instrument.”
The introduction of green bonds, along with the possibility of issuing instruments denominated in foreign currency, opens new avenues for state-owned and private companies alike. This development is anticipated to attract international institutional investors, thereby enhancing funding opportunities for Uzbekistan’s green transition.
In line with its Environmental, Social, and Governance (ESG) Policy, UzMRC is currently finalizing its ESG Strategy, which considers the issuance of various sustainability-linked financial instruments in the coming years. Nurmamatov remarked, “UzMRC is now finalizing its ESG Strategy which considers issuance of several sustainability-linked financial instruments including social and sustainable bonds.”
Globally, the sustainable finance market now exceeds $5 trillion. Uzbekistan has also successfully issued similar securities on international markets: in 2021, it placed its first SGD Bonds, and at the end of last year, its first Green Bonds.
Now, the ability to issue green bonds on the domestic market, coupled with the introduction of instruments denominated in foreign currency, opens new horizons for both state-owned and private companies. This will attract international institutional investors and provide an additional boost to funding Uzbekistan’s green transition, Odil Musaev, Managing Director at Alkes Research stated.
