Third World Bank Green Bond issue raises US$ 130 million from institutional investors
Friday 4 December 2009
The World Bank (International Bank for Reconstruction and Development, rated Aaa/AAA) announced today that its third green bond issue successfully raised US$ 130 million. World Bank green bonds support projects in client countries that meet specific criteria for low-carbon development. These bonds are an example of public and private-sector efforts to raise funds for projects seeking to mitigate the rise in greenhouse gas emissions or help people in developing countries affected by climate change.
The transaction was lead managed by SEB. Among the investors who purchased the bonds were institutions in the US such as the California State Teachers' Retirement System (CalSTRS), and in Sweden, the Swedish life insurance provider SEB Trygg Liv, and Swedish National Pension Funds - AP2 and AP3. The United Nations Joint Staff Pension Fund (UNJSPF), which had participated in the inaugural World Bank green bond last year, also invested in the latest World Bank green bond.
"For us as long-term investors, it is important to find responsible investments targeted at the global climate challenges. The green projects supported by the World Bank green bond are an important step in that direction", says Christina Kusoffsky Hillesöy, Head of Communication and Sustainable Investments at AP3 (Third Swedish National Pension Fund).
The World Bank issued its first green bonds in November 2008 for an amount of SEK 2,325 million. That issue marked the first time the World Bank had offered bonds to raise funds identified to a specific World Bank program. Since then the SEK issue has been increased twice with new investors participating. The World Bank launched its second green bond issue in April 2009, placing USD 300 million with the State of California Treasurer's office.
This third green bond transaction brings the total amount raised through World Bank green bonds to an equivalent of almost US$ 800 million.
Warren Evans, Director of the Environment Department at the World Bank, said "climate action in developing countries - specifically, mitigation and adaptation initiatives - will require important financing by the international community, from both public and private sources. We're pleased to see continued investor support to what the World Bank is carrying out in conjunction with our country partners; it's an indication that investors fully understand the inextricable link between development and climate change. Helping one clearly helps the other."
"The amounts involved in the negotiations on official climate financing are very small compared to the investment needs in emerging markets. Consequently, private financial flows must play the lead role. But for that to happen, investments must be profitable. The World Bank green bond provides a good investment and safe return, while offering investors the opportunity to actually help combat climate change," said Klas Eklund, senior economist, SEB.