IFC Issues AU$700 Million Green Bond to Boost Biodiversity Finance in Emerging Markets

The International Finance Corporation (IFC), a member of the World Bank Group, has successfully raised AU$ 700 million through green bond issuance in the Kangaroo market. Through this issuance, the IFC aims to bridge the biodiversity finance gap and foster sustainable economic growth in emerging markets.

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Strong Investor Demand for IFC’s Green Bond

The IFC priced the 10-year fixed-rate green bond, offering a 4.90% coupon, with a spread of 56.48 basis points over the December 2034 Australian Commonwealth Government Bond (ACGB), or ASW + 64 basis points. The transaction garnered significant interest from high-quality investors, including bank treasuries, central banks, and official institutions. The total order book reached nearly AU$800 million, including AU$70 million from joint lead managers.

Leading financial institutions, including ANZ, Daiwa Capital Markets Europe, and Nomura International, arranged the bond issuance. These institutions were instrumental in bringing the bond to market and securing widespread participation from global investors.

Tom Ceusters, IFC Director of Capital Markets and Investments, said, "I'm delighted to see strong interest from high-quality investors in our green Kangaroo bond to support biodiversity finance, which has emerged as a fast-growing area in green finance."

He added, "Funds raised through this issuance will finance projects that conserve, restore and protect biodiversity in emerging markets."

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IFC’s Ongoing Commitment to Sustainable Finance

The Kangaroo market is crucial for IFC, with Australian dollar issuances accounting for 19% of its total funding in 2024. IFC has consistently engaged the market to diversify its funding sources and build liquidity lines.

Additionally, the proceeds from the bonds will support biodiversity conservation and efforts to safeguard ecosystems in emerging markets. Key initiatives include the BTG Pactual Timberland Investment Group's strategy for reforestation in Latin America, which aims to restore and protect vital areas, and BBVA Colombia's biodiversity bond, recognized as the first globally, designed to help regenerate natural forests in Colombia.

In 2022, IFC published the Biodiversity Finance Reference Guide, the first framework to help identify biodiversity and ecosystem protection projects. IFC expanded its Green Bond Framework to include biodiversity, ocean, and water protection, with detailed criteria for climate projects.