THE Jamaica Stock Exchange (JSE) is set to introduce the trading of green and blue bonds as the Government seeks to expand investment opportunities for the private sector. During the 19th Regional Investments and Capital Markets Conference at Jamaica Pegasus hotel in Kingston on Tuesday, Finance Minister Dr Nigel Clarke unveiled plans to launch the financing facilities designed to fund environmentally friendly projects related to climate sustainability and ocean conservation.

“The Jamaica Stock Exchange will become the first stock exchange in the region to facilitate the issuance of green, blue, and coloured bonds,” declared Clarke.

He further disclosed that the finance ministry is collaborating with multilateral and bilateral partners, including International Development Bank (IDB) and International Monetary Fund (IMF), to establish the facilities and have them domiciled in Jamaica.

“Whenever I go on these road shows — whether it’s a deal or non-deal road show — and you give your presentation, they say, ‘Wait a minute, you don’t have any green or blue instruments?’ “ said Clarke in revealing what prompted the financing models.

Recognising a growing trend where more money for emerging markets lies in green and blue investments, with support from Inter-American Development Bank the JSE will be developing the infrastructure on the Jamaica Stock Exchange for the issuance of a green financing facility, and establishing clear criteria to ensure investors know what it means. This initiative is expected to be available by the end of June. The objective, however, is to make both financing and private sector projects in Jamaica accessible while ensuring sustainability.

“To ensure there is a return on these projects that need the cost of capital, we need to have what is termed a blended financing arrangement with other streams of capital coming in that have other motives and, therefore, might have different expectations of returns,” explained Clarke.

While acknowledging challenges faced by small countries in accessing large multilateral sources of financing, Clarke proposed building the necessary facility in Jamaica rather than navigating complex processes elsewhere. In addition to green and blue bonds, the finance ministry is working on a project preparation facility in collaboration with the same group of partners. This facility aims to provide financing for projects undergoing environmental and feasibility studies, addressing the challenges posed by social factors and vulnerability considerations.

“We have to take into consideration social factors and the vulnerable; it can be difficult to allocate resources for project preparation for projects that will take five years to come to fruition when you have needs today — that’s why having a dedicated facility where funds are available for project preparation is critically important,” stressed Clarke.

He confirmed the launch of the project and expressed plans to provide more concrete details on capitalisation later next year.

Addressing concerns about crowding out the private sector, Clarke acknowledged the historical role of the country as a ready source of investment, and announced a product coming to market to allow private investors to find every incentive to innovate and generate their projects.

“We plan, over the next 12 months, to bring to the capital markets — by way of a public offering — the Jamaica Mortgage Bank.” He assured, promising further details at a later date.

Highlighting successful government investments including a 20 per cent stake in Trans Jamaican Highway; 10 per cent in South Jamaica Power, an LNG-powered electricity generating plant in St Catherine; and under 20 per cent in Jamaica Public Service Company (JPS), Clarke outlined plans to consolidate these assets into an infrastructure vehicle that will be listed on the stock exchange to allow investors an opportunity to participate and give the private market exposure to infrastructure assets.

“The Government will retain a sizeable stake in this vehicle; this infrastructure vehicle will be partially owned by the Government. At a later time in the future the divestment can be total, but to begin, what we will do is list this vehicle with the Government retaining a large majority stake,” he said.

Clarke, however, declined to say what stake the Government will hold in the vehicle, citing that the initiative is still in the draft stage.