Key Impact Points:
- $500M debut bond oversubscribed sixfold: The bond aims to diversify Climate Investment Funds (CIF) financing sources and attract private sector investment.
- Supports low-carbon technologies: Proceeds will fund CIF’s Clean Technology Fund, focusing on battery storage, coal transition, and clean technology in emerging markets.
- Global support and investor confidence: Backed by nations like Britain, Japan, and Canada, CIF’s bond issuance underscores growing confidence in market-based climate solutions.
$500M Bond Issuance Success
The Climate Investment Funds (CIF) launched its debut $500 million bond on Tuesday, marking a milestone in diversifying its funding base to attract private sector investment for clean energy projects in emerging markets. The bond, which was six times oversubscribed, highlights the growing appetite for sustainable finance amid shrinking development funds.
“The challenge is on all of us to establish multiple sources of funding to tackle the climate challenge and to invest in the energy transition,” said CIF CEO Tariye Gbadegesin.
Addressing Climate Financing Gaps
Since its establishment in 2008, CIF has approved $7.4 billion for projects in countries like Argentina, Brazil, and India through six multilateral lenders, including the World Bank. The bond issuance aligns with Climate Investment Funds’s efforts to address the global $1.3 trillion climate finance goal.
Andrea Dore, global head of funding at the World Bank, emphasized the importance of private sector participation:
“The whole idea is to be able to crowd in private sector funding to fight climate change, so that was our hope and we were able to achieve it.”
Mechanism for Long-Term Sustainability
The bond, part of CIF’s Capital Markets Mechanism, was priced at 36.6 basis points over Treasuries with a 4.75% coupon. The three-year note attracted $3 billion in orders, with 80 investors in the book, reflecting robust private sector interest.
Gbadegesin stressed the significance of regular market access:
“Regular market access will help CIF shore up its access to capital against changes in political or economic conditions.”
International Support and Future Goals
Climate Investment Funds is backed by countries like Britain, Japan, and Canada, with $12 billion pledged to date. The Capital Markets Mechanism is expected to become a regular issuer, focusing on critical areas such as battery storage and clean technology to accelerate the global energy transition.
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