IPPToday #81: IFC issues US$1B green bond with great investors demand
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IFC, a member of the World Bank Group, today issued a 5-year green bond that raised US$1billion for climate-smart investments in emerging markets, amid surging investor demand.
The issuance, which was 2.6 times oversubscribed, marked the third time IFC has issued a US$1 billion global benchmark green bond over the past seven years. It raised IFC’s total green-bond issuance to more than US$7 billion.
IFC Vice President and Treasurer Jingdong Hua:
“IFC was the first institution to issue a $1 billion global benchmark green bond, demonstrating that we lead by example.Crowding in mainstream investors—as IFC has done today—is critical for us to accelerate the development of the green bond market. We need scale to tackle climate change, which requires trillions of dollars in financing.”
Half an hour after order books opened, demand surged above US$1 billion, with significant support from investors focused on socially responsible investments. Investors included Brown Advisory, Barclays, Andra AP Fonden, Calvert Research and Management on behalf of Calvert funds, Export Development Canada, Fjarde AP Fonden, Jupiter Global Ecology Diversified Fund, QBE Insurance Group, Mirova, Praxis Impact Bond Fund, State Street Global Advisors, Tredje AP Fonden, and the California State Teachers’ Retirement System (CalSTRS).
Tom Graff, Fixed Income Portfolio Manager at Brown Advisory, said:
“Brown Advisory’s sustainable bond strategy seeks equal parts performance and positive sustainable impact. A high-quality bond supporting climate-related projects like this IFC issue is a perfect addition to our strategy.”
Susan Love, Vice President and Treasurer at Export Development Canada, said:
“We were delighted to participate in the IFC green bond—the second time EDC has invested in green bonds for our liquidity portfolio. Our commitment to the development of the green bond market is expanding, and we will participate as both an issuer and investor in this product which aligns with the Government of Canada’s focus on climate change.”
Over the past three years, IFC green bonds have supported 125 climate-smart projects—including 33 in fiscal year 2017, according to IFC’s latest Green Bond Impact Report.
Proceeds from IFC green bonds are allocated within IFC to a separate account and will be used for investments in renewable energy, energy efficiency, and other areas that reduce greenhouse emissions.
Since 2005, IFC has invested US$18.3 billion in long-term financing from its own account, and mobilized another US$11 billion through partnerships with investors for climate-related projects. In all, IFC has issued US$7.25 billion in green bonds in 12 currencies—including Chinese yuan, Indian rupees, South African rand and Peruvian soles. These issuances are part of a global strategy to develop the green bond asset class in emerging markets.
As we reported in July, IFC invested INR 6.67 billion (US$103 million) in L&T Infrastructure Finance Company Ltd. by subscribing to the first official Green Bonds in India.
We have recentely reported on other IFC's deal activities:
- 350 MW Solem solar PV project in Aguascalientes
- 42 MW Alibunar wind farm in Serbia
- 250 MW solar project in Rewa, Madhya Pradesh (Solenergie Power)
- 250 MW solar plant in Gulf of Suez
- 414 MW Sirajganj 4 power plant