GLOBAL – The World Bank has launched a $550m (€414m), two-year fixed-rate green bond.

The bonds were placed with 17 investors, including Swedish buffer funds AP2 and AP3, Blackrock, the California State Treasurer’s Office, the California State Teachers’ Retirement System (CalSTRS), Deutsche Asset and Wealth Management, Everence, Nikko Asset Management, SEB Wealth, State Street Global Advisors (SSgA), TIAA-CREF and Trillium Asset Management.

The lead order for the transaction was from the California State Treasurer’s Office.

Doris Herrera-Pol, director and global head of capital markets at the World Bank, said: “World Bank green bonds act as a catalyst for the growing green-bond market that helps mobilise increased private capital flows to climate-focused projects.

“We are grateful for the support from pioneering investors, banks, issuers and others who are working to help expand this market and work towards a goal that benefits us all.”

World Bank green bonds support the bank’s lending to eligible development programmes designed to address the challenges of climate change in the developing world.

Of the bonds, 44% were placed with asset managers, 35% with pension funds and insurance companies, 19% with official institutions and 2% with corporates, while 61% of the bonds were placed with US, 38% with European and 1% with Japanese investors.

In addition to the traditional investment considerations such as safety of investment and risk-adjusted returns, all investors purchased the bonds due to their interest in supporting climate-friendly projects within their investment mandates.

Financial services firms Morgan Stanley and Nordic financial services group SEB are the joint-lead managers for this transaction.

Hans Beyer, global head of capital markets at SEB, said: “This transaction is the result of active engagement with a growing group of investors who want to address climate concerns alongside their fiduciary investment duties.

“The World Bank’s efforts to introduce green bonds and support the growth of the market have resulted in a number of mainstream investors adopting explicit green strategies that embed green bonds as a core holding.”

Andrea Dorfzaun, head of sovereign/supranational/agency debt coverage at Morgan Stanley, added: “The World Bank’s return to the green bond market was strategically targeted towards a growing community of diverse investors with sustainable and responsible mandates.

“This successful transaction shows the World Bank’s leading role in the further development of the green bond and SRI debt capital markets overall.”
The World Bank, also known as the Aaa/AAA-rated International Bank for Reconstruction and Development (IBRD), was the first to issue green bonds in 2008, responding to requests from large institutional investors looking for a liquid, plain vanilla product that explicitly supports the financing of climate-related projects.

Since then, it has mobilised the equivalent of more than $4bn through almost 60 green bond transactions that support the financing of eligible projects in its borrowing member countries around the world.

Examples of the types of projects supported by World Bank Green Bonds include renewable energy installations, energy efficiency projects, new technologies in waste management and agriculture that reduce greenhouse gas emissions, forest and watershed management and infrastructure to prevent climate-related flood damage.

The green bond’s settlement date is 22 August of this year.

Its maturity date is 24 August 2015.