The City of Cape Town’s first Green Bond issued in 2017 aimed to fund and refinance projects, including infrastructure, to address water supply shortages and mobility challenges in the region. It was used for water capture, storage and distribution infrastructure, alternative water treatment plants and flood defences. It was the first bond listed on Johannesburg Stock Exchange’s Green Bond Segment and was oversubscribed by four times. To link the green bond issuance with assets, the refinancing of existing projects was preferred, however, investors wanted to use the bond to address immediate issues such as water scarcity caused by droughts. The city identified projects that were eligible within its capital programme and evaluated according to the Climate Bonds Standards. The green bond helped in the assessment of future infrastructure developments. The city raised the targeted ZAR 1bn/USD 83M from eight bidders; the bond has a 10-year tenure and was issued at a spread of 133 basis points of the government bond. Cape Town's green bond won the best green bond award at the UK Environmental Finance Green Bond Awards 2018.


Cape Town, South Africa


Sub-Saharan Africa


Green bond (private sector issuance)

Instrument category

Debt financing

Secondary instruments


Project size (range)

USD 50-100M

Project size (details)



City of Cape Town

Year of financial closure



City of Cape Town

Primary financer

Investors in the bond, represented by eight bidding entities.

Other co-financers

Other funding sources raised by the City of Cape Town

Other contributors

Climate Bonds Initiative; Moody’s rating agency; Rand Merchant Bank; KPMG

Other transaction participants

The bond has been accredited by Climate Bonds Initiative and was certified by Moody’s rating agency. Rand Merchant Bank acted as lead arranger for the bond.

Barriers addressed

Cost efficient access to finance: Green bonds help to drive down the cost of capital for climate action projects in developed and emerging markets; to grow aggregation mechanisms for fragmented sectors; and to support governments seeking to tap debt capital markets.

Financing structure

Green bonds are a fixed-income instrument specifically earmarked to raise money for climate and environmental projects. These bonds are typically asset-linked and backed by the issuing entity's balance sheet, so they usually carry the same credit rating as their issuers' other debt obligations. In order to manage the risk of holding unallocated proceeds from the bond issuance, Cape Town insisted that the value of the bond issuance be less than the total budget of the projects, with the balance of funding for these projects to be met through existing funding sources. The bond has a tenor of 10 years and will be maturing in 2027. It is an amortising bond based on Cape Town’s preference. This means that the principal (face value) amount on the debt is paid down regularly, along with its interest expense over the bond's life. There will be semi-annual equal capital repayments to the investors during the course of Cape Town's Green Bond instrument. The bond has been accredited by Climate Bonds Initiative and was certified by Moody’s rating agency. Rand Merchant Bank acted as lead arranger for the bond. KPMG acts as an independent auditor for the process.

Suitability for cities in low-and-middle income countries (detail)

Yes. Similar climate bonds have been developed in South Asia and Latin America. For successful implementation, it requires a third-party accrediting agency.


CCFLA. (2021) Analysis of Urban Climate Adaption Finance


Sullivan, D. (2020) City of Cape Town Green Bond Issuance. City of Cape Town Isixeko Sasekapa Stad Kaapstad.


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