The World Bank’s private sector lending arm – the International Finance Corporation (IFC) – has raised €1bn through a green bond. The seven-year instrument is the IFC’s inaugural euro-benchmarked bond.
In a statement, the IFC said the bond raise is a ‘landmark transaction’ that marks a point of evolution in the IFC’s funding strategy. The bond was priced at a semi-annual coupon of 3.125%, 24.7 basis points higher than the reference benchmark.
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Bond proceeds, governed by the IFC’s Green Bond Framework, will finance projects in thematics such as adaptation, mitigation, biodiversity, water protection and circular economy.
“This inaugural EUR benchmark expands IFC’s access to investors in Europe seeking high-quality, liquid, sustainable-labelled bonds denominated in euro”, said Jorge Familiar, the World Bank Group’s vice president and treasurer.
The order book reflects a diverse investor base with a high degree of interest from 56 investors. Collectively, the order book stood at €2.7bn, which the IFC says points to robust demand for the euro-denominated bond. 70% of investors were central banks and official institutions while 13% were pension funds, asset managers and insurers.
“Achieving a high-quality orderbook from a diverse range of investors in a competitive and volatile market environment is a powerful endorsement of IFC's credit strength, its updated Green Bond Framework and the growing investor appetite for high-quality sustainable investments”, said Alex Paterson, a managing director within the sovereign and debt capital division (SSA DCM) at Barclays.
The transaction is the third benchmark-based bond issuance from the IFC this fiscal year. Earlier, the lender had raised $2bn in a USD-denominated green bond and A$ 1.5bn in its largest ever Australian dollar issuance.
The green bond raise is set against a backdrop of the World Bank Group having dropped its climate lending targets. This followed criticism from the Trump administration over the bank’s focus on climate change. European shareholders such as France have opposed America’s position on that front.
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