The Climate Investment Funds (CIF) Capital Markets Mechanism (CCMM) has issued a $500 million three-year bond for climate action and sustainable development. The bond, the first issuance under CCMM’s borrowing program, was oversubscribed to $3 billion.
“Today is a historic moment for climate finance,” said Tariye Gbadegesin, CEO, Climate Investment Funds. “The inaugural CCMM bond issue has exceeded all expectations, with our order book over six times over-subscribed. This is an enormous vote of confidence and a sign of the keen market interest in backing high-quality clean energy projects. These bonds will multiply the funds available for scaling-up clean technology and infrastructure in developing countries – not in ten years, but now, when it’s most critically needed.”
CCMM accelerates climate funding by frontloading future reflows from CIF’s Clean Technology Fund (CTF) funded operations. CCMM supports CTF projects in developing countries, focusing on low-carbon technologies such as renewable energy, energy efficiency, sustainable transport, green supply chains and industry decarbonization.
CTF aims to address the significant financing gap for energy transitions by mobilizing capital at scale and directing it towards high-impact programs. CIF funding is channeled through six triple A-rated multilateral development banks (MDBs) who act as implementing entities of the CTF. The World Bank acts as CCMM’s Treasury Manager, as well as Trustee and host of the Secretariat for the CIF.
Final pricing was fixed at +36.6 basis points over the three-year U.S. Treasury, which resulted in a re-offer semi-annual yield of 4.838% and re-offer price of 99.757% for the bonds. The bond will be listed on the International Securities Market of the London Stock Exchange.
The bond had a $3 billion orderbook comprising asset managers, insurance and pension funds; central banks and official institutions and bank and corporates. More than half came from Europe the Middle East and Africa with only 31% coming from the Americas and 5% from Asia.
“This is a groundbreaking step for the Clean Technology Fund,” said Alain Papiasse – Chairman, BNP Paribas Corporate and Institutional Banking (CIB). “There has been a strong response from investors, who consider CCMM to be pure play green/sustainable ESG investment offering high-quality fixed income investment opportunities.”
While the bond does not specifically mention the blue economy, many of the focal areas include blue economy issues such as sustainable transport, renewable energy and green supply chains.
