Banque Marocaine Du Commerce Extérieur - PDF

Banque Marocaine Du Commerce Extérieur PROSPE CTUS SUMMA RY ISSUE OF UNLISTED BONDS -GREEN BONDS- TOTAL AMOUNT: MAD Tranche A (fixed unlisted) Tranche B (revisable unlisted) Ceiling MAD 500

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Banque Marocaine Du Commerce Extérieur PROSPE CTUS SUMMA RY ISSUE OF UNLISTED BONDS -GREEN BONDS- TOTAL AMOUNT: MAD Tranche A (fixed unlisted) Tranche B (revisable unlisted) Ceiling MAD 500 Million Number of securities Bonds Nominal value MAD Tradability of securities Over-the-counter Rate Fixed, determined in reference to the 5-year rate calculated on the secondary yield curve of Treasury bonds, as published by Bank Al- Maghrib on November 8 th, 2016 Revisable on an annual basis, determined in reference to the secondary yield curve of Treasury bonds, as published by Bank Al- Maghrib on November 8 th, 2016 Risk premium Principle repayment Repayment guarantee Maturity Allocation method Between 55 and 65 basis points in fine None 5 years French auction method, with no prioritization between tranches SUBSCRIPTION PERIOD: FROM NOVEMBER 14 TO 16, 2016, INCLUSIVE SUBSCRIPTION RESERVED TO QUALIFIED INVESTORS UNDER MOROCCAN LAW AS DEFINED IN THE PRESENT PROSPECTUS CONSULTING BODY CENTRALIZING BODY IN CHARGE OF THE PLACEMENT Approval of the Moroccan Stock Market Authority (AMMC) In accordance with the provisions of AMMC circular, delivered in application of Section 14 of Dahir (Royal Decree) related to law no dated September 21 st, 1993 as amended and supplemented, the original copy of the present prospectus has been approved by AMMC on November 4 th, 2016 under reference no. VI/EM/026/2016. WARNING: The Moroccan Capital Markets Authority (AMMC) approved on November 4 th, 2016 a prospectus related to the Green bond issue by BMCE Bank. The prospectus approved by the AMMC is available at any time at the headquarters of BMCE Bank and at the financial advisor. It is also available within a maximum deadline of 48 hours from the order collection entities. The prospectus is publicly available on the AMMC web site: PART I: PRESENTATION OF THE OPERATION I. Description of BMCE Bank Green Bonds As part of its Green Bonds issue, BMCE Bank has mandated VigeoEiris in order to issue insurance on the green nature of these bonds. In this vein, the Board of Directors held on October 31 st, 2016 took note of the rules, procedures and commitments associated with green bonds, as they were presented to VigeoEiris office in order for it to issue its second opinion, and decided to apply those rules, procedures and commitments as outlined in the report of the second opinion and the present prospectus, all throughout the loan duration. 1. Use of proceeds: BMCE Bank has a portfolio of (wind, solar, hydroelectric, etc.) projects to fund far exceeding the amount of MAD 500 million of bank debts. These projects are part of investments that may individually vary between MAD 45 million and MAD 2.7 billion. This pipeline, evolving according to future upcoming projects, will be subject to selection and assessment by the Green Bond project team and external consultants in order to confirm its eligibility. For the sake of the estimates, and based on the already-identified projects, the bank has started a process of projects identification and selection, provided that they are selected, to achieve 60% use of the issue net proceeds over a 12- month period and 80% over a 24-month period. Indeed, the saturation of the line during this period depends on (i) the agreement of BMCE Bank competent organs on the project files and those of customers to entrust these funding files to the Bank, (ii) the starting and/or effective continuation of projects on time expected at their initiation and (iii) the spreading of drawings on the debt according to the drawings schedule and the start date of each project. Eligible projects are located in Morocco, managed by companies of all sizes (SMEs and large enterprises) and concern the production of renewable energy or the improvement of energy efficiency. Eligible funding categories are presented as follows: Renewable energies Energy Hydroelectric power plants whose installed capacity is less than 15 MW; Wind turbines; Biomass combustion systems generating heat and/or electricity; Solar thermal power plants; Production of hot water systems for treatment processes and/or heating/cooling of local and/or domestic hot water; Drying systems with high/low temperatures; Photovoltaic solar plants (solar farm projects, industrial integration & training, panel assembly unit; Use of geothermal energy with / without heat pumps (drilling and pumping test); Biogas stations and/or engines (agricultural, municipal, industrial, wastewater treatment waste). Investment in equipment, technologies or projects allowing to achieve at least 20% energy savings 2 efficiency (30% for commercial buildings) or at least 20% CO2 emissions reduction in terms of available equipment on the market typically ( Morocco baseline ), such as the realization of investment projects (expansion or acquisition of equipment, thermal renovation, insulation, glazing, etc.) or the extension of production and distribution capacity of energy efficiency or renewable energy equipment suppliers, etc. The expected overall positive impacts of this issue falls under the mitigation of climate change impacts through (i) the achievement of energy savings and (ii) the prevention of greenhouse gas emissions. 2. Project Evaluation and Selection: Upon receipt of the funding application, the Investment & Structured Finance Department -ISFD- verifies that the project is directly registered in the development of renewable energy/energy efficiency sector. Then it sends a note to the Sustainable Development Department (Governance and Development Group) and to the Commitment Analysis and Monitoring Department (Risk Group), to validate the eligibility of the Green Bond funding project. The three departments constitute the Green Bond project team. Once the project is deemed eligible, the legal documentation relating to environmental and social issues is collected by ISFD that organizes field visits in consultation with the Sustainable Development Department. Analysis of the Environmental and Social Risks and Due diligence is carried out by the Sustainable Development Department. This Due diligence is based on the respect of: The legal regulation (BAM exclusion List and collections of environmental impact studies); The Bank's international commitments (the exclusion list of the International Finance Corporation -IFC, its performance standards, SEMS 1 survey-bmce Bank, IFC 2 sectoral guidelines and the Equator Principles 3 requirements); And, the internal procedures. Furthermore, the Bank appoints a team of external consultants specialized in the field of energy once the eligibility of the project is validated by the project team in order to: Verify that project falls within the renewable energy sector; Verify, for energy efficiency projects, that the equipment will indeed achieve a 20% energy savings (or reduction of CO2 emissions) compared to typical equipment available on the market ( Morocco baseline ); And, submit to the Bank estimates of key indicators defined for the eligibility of projects to be covered by the green issue. The team of external consultants will accompany the Bank in the selection of projects and will bring a level of confidence in relation to the requested indicators via reports as the files are presented. Thus, once the project is selected, the project team internal to the Bank shall give the environmental, social and governance (ESG) due diligence and the file is then submitted to the loan committee which will decide on its fate. Overall, BMCE Green Bond issue is subject to: An upstream external evaluation: A Second Party opinion on the responsible nature of the green bong and covering three components: social responsibility profile of the issuer, commitments related to projects (fund allocation and ESG criteria integration in the assessment and monitoring of projects) and reporting; A post-issue verification (presented below); 1 Social and Environmental Management System And a review of the Second Party Opinion: to be conducted on the maturity of the issue, in order to update the assessment of the issuer, appreciate deployment commitments and results with regards to the impacts of funded projects by the issue and confirm alignment with the Green Bond Principles. In this context, Vigeo will intervene for the revision of the Second Party Opinion in the 2 nd year following the issue. The report will be published along with the bank s financial annual report. 3. Management of Proceeds: As previously mentioned (use of proceeds), the bank has begun a process of project identification and selection, provided that they are selected, in order to achieve 60% use of the issue net proceeds over a 12- month period and 80% over a 24-month period starting from the issue date. Pending the fund allocation, the issue net proceeds amount will be managed by the Bank within its treasury, at its discretion, in cash or other liquid marketable instruments, which do not include significant carbon-intensive activities or controversial activities in accordance with the criteria applied in its cash management. The proceeds will be housed in a separate account of BMCE Bank throughout the maturity of the bond issue. In case of loan suspension, the Bank will use the issue proceeds to finance other eligible projects meeting current fund allocation requirements and the eligibility process, and will monitor the fund allocation to each eligible 4 project. Post-issue, an annual financial audit will be carried out by the auditor and will cover audited fund allocation and monitoring until the maturity of the Green Bond. The audit will cover fund allocation and traceability: amount allocated per project, verification of the existence of the financing on BMCE Bank books and will translate into the issuance of a certificate of conformity of the use of funds, subject of this operation. 4. Reporting: BMCE Bank undertakes to annually report in the annual financial report and throughout the issue duration, on projects funded by the Green Bond issue. This reporting will be realized by the publication of an annual report sent to investors and rendered accessible publicly. The projects will be added to the report once the issuer approves and evaluates a project as being eligible. The reporting will include elements on the fund allocation: The list of projects financed by the issue with a description of each project, the amount allocated, the total cost of the project, starting from the date of initial funding (in accordance with the privacy policy of customer data); The percentage of the total amount allocated in comparison to the total amount of the issue. And in consolidated, the environmental benefits: Energy savings in MWh; Avoided CO 2 emissions; Renewable energy production in MWh; Installed renewable energy capacity in MWh. These indicators will be presented for the reporting year and cumulatively. 4 This supervision is integrated into the annual process for financial reporting 4 Alongside reporting indicators, the following additional indicators relating to ESG risks, will be mentioned if the information is available: Total jobs created and/or trained personnel and Total non-relocated populations and total amount of compensation when necessary . Will also be published along with the annual reporting: The certificate of conformity of the use of funds, subject of this operation, issued by the auditors; And after the second anniversary of the possession date, the updated Second Opinion from Vigeo. 5. Vigeo Eiris recommendations In order to meet Vigeo recommendations, BMCE Bank has set up a procedure note that formalizes and defines the categories of projects eligible for the issue, namely categories of Energy Efficiency and Renewable Energy and commits each party to respect the different obligations necessary for the implementation and monitoring of the Green bond. The following table shows all the recommendations issued by Vigeo along with their implementation status: Item Vigeo Eiris recommendation BMCE Bank response Use of proceeds Formalize and define the categories of projects eligible Internal procedure note put in place for the program, namely EE and RE categories and eligibility criteria, specifying and clarifying the concept of baseline Align the issue objectives (targeted project categories) Achieved and the bank's PIF 5 commitments Identify with the Structured Financing and Investment In Progress - Pipeline identified, the files will team the pipe-line of EE and RE projects by category, subject to GB evaluation, monitored, post along with the project's nature, total amount, the total subscription project total disbursed in progress, total remaining to be disbursed, launching date of the project, financing, progress in the granting of the loan, availability of impact environmental indicators... Project Evaluation and Selection Formalize systematic criteria of ESG risk management Formalize the process of evaluation and selection of projects eligible for financing not the issue Formalize BMCE commitments related to the deployment of these processes and in terms of future organizational capacity and skills, along with an associated action plan (specific, dated, visible objectives) - Rapidly deploy the commitments to strengthen internal expertise in E&S risk assessment among Structured Financing and Investment teams Achieved The process of evaluation and selection of projects eligible for funding is formalized and documented. It will be deployed in support of: -The fund allocation requirements, based on the definition of eligible project categories -The conduct of due diligence and additional project eligibility analysis, in line with IFC's performance standards (International Finance Corporation), the Equator Principles and good customer management rules (Know Your Customer) -Establishment a procedural note resuming the integration of ESG requirements in the identification, assessment of eligible projects, with the introduction of a device for the definition and prioritization of mitigation measures with regards to environmental and social impacts, at the time of the granting decision. -Team strengthening internally in terms of risk analysis expertise and ongoing energy The evaluation and selection process should be regularly In progress updated, monitored internally and reviewed by an external party. Management of Formalize the fund allocation process The funding allocation process is that of funding 5 Positive impact finance 5 Proceeds Reporting Formalize the reporting system (collection, monitoring and consolidation indicators and arrangements) The strengthening of indicators relating to ESG risks management pertaining to funded projects, their impact and their governance. The strengthening of the device dedicated to bond issue monitoring in terms of monitoring & control of project deployment, as well as the implementation of systematic control loops for all stages of projects' risk and impact assessment procedure Setting up a device dedicated to the management, monitoring and surveillance of funded projects by the post-grant issue and deployed mitigation measures of impacts Define precise collection, treatment and reporting procedures on claims and controversies relating to funded projects, make them visible and controllable traditional investment loans, already formalized in internal procedures Achieved Directed: impact indicators defined and additional ones added in case of availability of information Procedure note formalized In progress Compliance procedures already existing II. Characteristics of the operation Tranche A Characteristics (Fixed rate bonds, unlisted on Casablanca Stock Exchange) Nature of Securities Legal form Bonds unlisted on Casablanca Stock Exchange, dematerialized by registration with the central securities depositary (Maroclear) and entered into account at the chartered affiliates. Bearer bond Tranche ceiling MAD Maximum number of securities to be issued bonds. Nominal value per unit MAD Loan maturity Subscription period 5 years. From November 14 to 16,2016, inclusive. Possession date November 21 st, Maturity date November 21 st, Issue price Allocation method Nominal interest rate Calculation method 100%, i.e. MAD at the subscription date. French auction method, with no prioritization between tranches. Fixed rate. The nominal interest rate is determined the 5-year rate calculated on the secondary yield curve of Treasury bonds, as published by Bank Al-Maghrib on November 8 th, A risk premium ranging between 55 bps and 65 bps (to be fixed upon the closing of the subscription). This reference rate will be published in a legal gazette on November 10 th, The nominal interest rate will be published no later than November 21 st, 2016 by BMCE Bank in a legal gazette. The reference rate is determined through linear interpolation using the two points framing the full 5-year maturity (actuarially). 6 Risk premium Interests Principal repayment Early repayment Tradability of securities Assimilation clauses Rank of the loan Repayment guarantee Rating Representation of the bondholders body Between 55 and 65 basis points. Interests will be served annually at the anniversary dates of the loan s possession date, i.e. November 21 st of each year. Their payment shall take place on the very same day or the first business day following November 21 st, if this day is not a business day. Bond interests will cease to accrue as of the day when the capital will be proposed for repayment by BMCE Bank. No postponement of the interest shall be possible under this operation. Interests will be calculated as per the following formula: *Nominal x nominal rate+. Tranche A, unlisted on Casablanca Stock Market, will be the subject of a repayment in fine of the principal amount. In the event of merger, demerger or partial contribution of assets of BMCE Bank taking place during the term of the loan and resulting in the full transfer of the assets in favor of a distinct legal entity, the rights and obligations in connection with the bonds shall be automatically transferred to the legal entity substituted in the rights and obligations of BMCE Bank. BMCE Bank undertakes, during the entire loan period, to not proceed to any early repayment of the bonds, subject of the present issue. However, the bank keeps the right to carry out, with the prior consent of Bank Al Maghrib, the buyback of bonds in the secondary market, provided the conditions established by the legal and regulatory provisions. This repurchase is any inconsequential to the subscriber who wishes to keep its securities till due date and without any incident on the regular amortization schedule. The bonds thus redeemed can be cancelled only after the consent of Bank Al Maghrib. Over-the-counter. There is no restriction imposed by the conditions of the issue to the free tradability of the bonds. There is no assimilation from a previous issue to the bonds issued by BMCE Bank. In the case BMCE Bank would subsequently issue new securities enjoying, in all regards, rights that are identical to those of Tranche A, it may, without requiring the bearers consent, carry out the assimilation of all the securities of the successive issues, thus unifying all their management and trading operations. Bonds issued by BMCE Bank and their interests constitute direct, general, unconditional and unsubordinated commitments of the Issuer, ranking equally among themselves and all other present or future unsecured debts of the Issuer. The present issue has not been subject to a special guarantee, of any nature whatsoever. The present issue has not been subject to any rating request. Pending the holding of Bondholders General Meeting, the Board of Directors held on October 31 st, 2016, designated Mister Hamad Jouahri as a temporary representative of Tranche A and B bondholders, in accordance with the relevant statutory provisions. This decision shall take effect concurrently
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