Debt instruments issued by the local government to finance capital expenditure for waste management facilities and services, which can be exempt from national and local taxes.
TARGET USERS: Individuals, Businesses, Industry, Government
KEY CONSIDERATIONS: Debt instruments issued by the local government to finance capital expenditure for waste management facilities and services, which can be exempt from national and local taxes.
The average municipal waste collection rates in low-income countries is estimated at 36%, increasing to 82-100% in upper-high income countries. Africa (25-70%) and Asia (50-90%) are the continents with the lowest average collection rates. There is a clear need for waste management infrastructure in low-income countries to stop the flow of waste, and in particular, plastic waste, into nature and our oceans.
Traditional sources of capital for waste management infrastructure investments are insufficient to meet capital requirement needs for our growing waste volumes. Institutional investors, particularly pension and sovereign wealth funds, are increasingly seen as viable actors to fill these financing gaps.
Capital markets enable issuers to tap into large pools of private capital from institutional investors. Bonds are appropriate investment vehicles for these investors as they are low-risk investments with long-term maturities, making them a good fit with institutional investors’ liabilities (e.g. pensions to be paid out in several decades).
Across investors and financial markets, different entities face different types and severities of risks related to waste, depending on many factors including degree of long-term exposure, likelihood of negative impacts, and ability to mitigate impacts or shift positions.
Bonds offer relatively stable and predictable returns, and long-term maturities. This makes them a good fit with institutional investors’ needs. The bond market can reward bond issuers and investors for sustainable investments that accelerate progress toward a low carbon and climate resilient economy.
Commonly used as long-term debt instruments, bonds are issued by governments, companies, municipalities, commercial and development banks to finance or re-finance assets or activities with environmental benefits, including waste management.
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