Major institutional investors back IFC’s first US-targeted green bond

Major US-based institutional investors such as BlackRock, the California State Teachers’ Retirement System (CalSTRS), TIAA–CREF and the United Nations Joint Staff Pension Fund (UNJSPF) have backed the first US market green bond from the World Bank’s International Finance Corporation (IFC).

BlackRock is the world’s largest asset management firm, with $3.7trn of assets under management. CalSTRS has $152bn in assets, while TIAA–CREF is the $453bn retirement provider for the academic, research, medical and cultural fields. The New York-based UNJSPF has a $40bn portfolio.

The IFC on Friday (April 27) launched its first green bond in the US market – raising $500m (€378.4m) for climate-friendly investments in emerging markets.

The IFC said the issue was “well-received” and supports its strategy of attracting US investors.“This bond will strengthen our ability to invest in innovative energy-efficiency and renewable-energy projects that can help these countries confront climate change,” said IFC Chief Executive Lars Thunell.

The bonds’ proceeds are set aside in a separate account for investing exclusively in renewable energy, energy efficiency, and other climate-friendly projects in developing countries.

“An integral part of our strategy”

“The US-dollar market is an integral part of our strategy to support the development of the private sector,” added IFC Treasurer Jingdong Hua. Green bond issues have been rare in the US compared to Europe and Asia.

J.P. Morgan was the lead arranger for the AAA-rated issue, which matures on May 15 2015. The IFC’s climate-related investments totalled $1.7bn in the 2011 fiscal year.