Leading investors pile into new green bond from the International Finance Corporation

Mirova, AP2 and BlackRock among buyers of $700m issue

The International Finance Corporation (IFC), a member of the World Bank group, has issued its latest green bond, raising $700m (€614m) in the process and its taking total issuance to date to around $5bn.

IFC’s US dollar-denominated bond has a lifespan of 10 years, a rating of triple ‘A’ and a coupon, or interest rate, of 2.125% per annum. Underwriters of the issue were Bank of America and JP Morgan of the US, TD Securities of Canada and France’s Crédit Agricole.

While the IFC originally intended to raise $500m with the green bond, which finances climate-friendly projects in emerging markets, considerable investor demand for its debt enabled it to take in $200m more.

Investors that bought the bond include several from the responsible investment space like French asset manager Mirova, US asset management giant BlackRock and AP2, the Swedish buffer pension fund.

“In addition to IFC’s strong credit profile, there are two components of IFC’s Green Bond Program that distinguish it as especially attractive for investors: impact reporting and environmental second opinion,” said Ashley Schulten, a BlackRock Portfolio Manager.

Added Chris Wigley, Senior Portfolio Manager at Mirova: “We appreciated the opportunity to invest in IFC once again, particularly with a ten year maturity.“We were also pleased to see included in eligible projects, investments in sustainable forestry which is something of a rarity in green bonds currently.”

According to the IFC, proceeds from its green bonds are paid to a separate account and then used for investments in renewable energy, energy efficiency, and other areas that reduce greenhouse gas emissions. The criteria for the investments have been independently verified by CICERO (Center for International Climate and Environmental Research-Oslo).

During IFC’s fiscal year 2015, 38 investments were funded with proceeds from its green bonds. These investments should, in turn, lead to savings of 2.5m tonnes of carbon dioxide (CO2) per year.

Elsewhere, the London-based Climate Bonds Initiative “reports”:ttp://www.climatebonds.net/2016/03/nordex-issues-first-green-schuldschein-debt-instrument-eur-550m-621m-wind-energy-and-gains that German wind firm Nordex has raised €550m with a green bond that was assured as such by DNV GL of Norway. Nordex’s bond is a German ‘Schuldschein’, or debt that is held by investors until maturity.

It comes as rating agency Moody’s has published the methodology it will use to grade green bonds. It will rely on five criteria for the grading, including organisation, use of proceeds as well as the management and disclosure of such use. The gradings will range from GB1 (Excellent) to GB5 (Poor).