Major global institutional investors back massive new $600m World Bank green bond

10-year issue is the bank’s largest dollar-denominated green bond to date

A range of leading global investors including Sweden’s Andra AP-fonden (AP2), Fjärde AP-fonden (AP4), Blackrock, Deutsche Bank and the United Nations Joint Staff Pension Fund among others have backed a new $600m (€529.7m) green bond from the World Bank.

The 10-year fixed rate issue is the World Bank’s largest US dollar-denominated green bond and also its longest-dated green benchmark in the currency.

“With today’s issue, the World Bank continues to attract new investors and expand the investor base for the green bond market, marking another important milestone,” the bank said in a statement.

It has now issued nearly $8bn equivalent through over 80 green bond transactions in 18 currencies since its first one in 2008. The proceeds of the bonds go towards renewable energy, energy efficiency, waste management technology and environmental infrastructure.

The bank said the bonds were placed with 25 investors including AP2, AP4, Blackrock, Deutsche Bank Treasury (its first green bond investment), Mirova, Nikko Asset Management, the UN Joint Staff Pension Fund and Zuercher Kantonalbank.

Forty three percent of the issue was placed with asset managers, 31% with bank treasuries and corporates, and 26% with pension and insurance companies. The geographic breakdown was as follows: 39% Americas, 28% in Europe, 17% in Africa, and 16% in Asia.

“Landmark green issuances from triple-A issuers such asthe World Bank further enhance the appeal of the green bond market, promoting investment in sustainable projects that mitigate the effects of climate change at commercially appealing returns”, said Alex von zur Muehlen, Group Treasurer of Deutsche Bank.

The issue, which has a coupon, or interest rate, of 2.125%, was co-arranged by Deutsche Bank, Morgan Stanley and SEB.

“We are grateful to the investors, banks, issuers and other participants who are working together to help expand this market and support an objective that benefits all of us,” said Doris Herrera-Pol, Global Head of Capital Markets at the World Bank.

Separately, the World Bank has issued the longest fixed-rate maturity green bond to date, a $30m, 30-year bond issued in response to demand from Zurich Insurance Group. Morgan Stanley was the sole lead manager for the transaction.

Zurich has pledged to invest up to $2bn in green bonds. The bond matures on February 25, 2045, and issues a coupon of 1.0325%.

Dr. Michael Leinwand, CIO of Zurich Insurance Group, Germany, said: “As an insurance company we frequently invest into maturities of 30 years and longer. Practically, this means investing for the next generation. What better way could we find than working with the World Bank on a customised solution to both outperform our liabilities and tackle climate change?”