Following the United Nations’ Climate Change Conference, COP26, Carolyn Gelling, Head of Equity Markets at The International Stock Exchange (TISE), looks at the role stock exchanges such as TISE are playing in mobilising capital to help fight climate change through the prism of a particular bond listing. 

Decisions impacting the future of our planet were at the heart of the United Nations’ Climate Change Conference, COP26. I am pleased to say that The International Stock Exchange (TISE) is among those exchanges who are already playing an active role in facilitating a sustainable future and I am delighted that we have been able to put this into action in collaboration with The Isle of Man Treasury.

In September, The Isle of Man Treasury listed £400 million sustainable bonds on TISE. The Isle of Man Treasury £400 million 1.625% Sustainability Notes due 2051 are listed on our Qualified Investor Bond Market (QIBM) and admitted to our sustainable market segment, TISE Sustainable.

This transaction is hugely important for us in the Isle of Man for three key reasons.

First and foremost, it is the impact it will have in our community.

The issuance is in line with the Isle of Man Government’s newly-established Sustainable Financing Framework. The eligible projects covered in the Sustainable Financing Framework include clean transportation, energy efficiency, affordable housing, education and healthcare.

Ultimately, in effect, this transaction should help finance the provision of these important services for the long-term benefit of our community in the Isle of Man.

Secondly, this places the Isle of Man at the forefront of sovereign sustainable capital raising.

The Sustainable Financing Framework is aligned to the International Capital Market Association (ICMA) Green Bond Principles, ICMA Social Bond Principles and ICMA Sustainability Bond Guidelines, and it has received a Second Party Opinion from Sustainalytics. HSBC acted as Sole ESG Structuring Advisor.

The transaction has garnered credibility internationally, including from the leading providers of sustainability standards and advisory services. It also positions us, as an island, ahead of many of our comparable peer jurisdictions in respect of sustainable capital raising.

Thirdly, it has seen the island build relationships with and receive recognition from some of the biggest names in the global debt capital markets.

The bonds are rated Aa3 by Moody’s and were offered under standalone documentation. Banco Santander S.A., Barclays Bank PLC and HSBC Bank plc acted as joint lead managers with international law firm Dentons acting as lead counsel to the joint lead managers. EY acted as Independent Financial Advisor. Clifford Chance LLP acted as Legal Advisor to The Isle of Man Treasury team.

Indeed, Caldric Randall, Chief Financial Officer at The Isle of Man Treasury, has commented that he was delighted with the strength of institutional demand for the island’s debut issue of sustainable bonds.

Locally, Cains Advocates Limited acted as lead Isle of Man Counsel to the Treasury on the transaction and Cains Listing Services Limited (CLSL), part of the Cains Group, acts as listing agent for The Isle of Man Treasury in respect of the listing on TISE.

The transaction is also significant for us at TISE.

“TISE Sustainable is a great example of an initiative which is intended to mobilise capital for sustainable purposes.”

Having had a presence in the Isle of Man since 2017, we were extremely pleased to see this domestic sovereign bond list on the Exchange. It further demonstrates the ecosystem that has been built up in the Isle of Man around listings on TISE, which has brought a new revenue stream to the island from both local listings and those facilitated through local professional services firms.

It also highlights the attractiveness for international debt issuances to be listed on our new professional-only bond market, QIBM, as well as being admitted to our sustainable market segment, TISE Sustainable.

Launched in July this year, TISE Sustainable is Europe’s most comprehensive sustainable market segment. The segment is available free of charge to all TISE-listed issuers – including both equity and bond issuers – who comply with at least one recognised framework or rating. It provides qualifying issuers and their securities with enhanced visibility among investors.

“We are delighted that by working with The Isle of Man Treasury we have been able to put this into action.”

As well as the sustainable bonds issued by The Isle of Man Treasury, examples of admissions to TISE Sustainable include green bonds issued by the largest sustainable property developer in the UK, Canary Wharf Group, as well as sustainability-linked bonds issued by Pfleiderer, a German headquartered company with 125 years’ history of sustainably manufacturing wood products.

In addition to launching TISE Sustainable, we have also joined the United Nations’ Sustainable Stock Exchanges Initiative (UN SSE). UN SSE is a UN Partnership Programme whose mission is to provide a global platform for exploring how exchanges, in collaboration with other market participants, can encourage sustainable investment.

TISE Sustainable is a great example of an initiative which is intended to mobilise capital for sustainable purposes and we are delighted that by working with The Isle of Man Treasury we have been able to put this into action through an issuance which is intended to bring a range of environmental, social and sustainable benefits to the Isle of Man.

An original version of this article was published in IOM Portfolio Magazine, December 2021.