IFC launches pioneering Komodo green bonds
Highlighting the increasing popularity of green bonds, a report states that the IFC issued a record 32 green bonds valued at US$1.8 billion in the fiscal year ended June 30 2018
The International Finance Corporation (IFC), a member of the World Bank Group, on October 8 launched the issuance of its pioneering Komodo green bonds, amounting to 2 trillion rupiah (US$134 million) to fight climate change.
The five-year bonds were priced at par and offer a yield of 8% per annum. This is the first green Komodo offshore bond offering by a multilateral development bank for investment into climate projects in Indonesia. The proceeds will be used to finance underlying infrastructure and climate-related projects, in accordance with the Green Bond Principles.
Komodo bonds are rupiah-denominated bonds sold in the international market, with payments of principal and interest to be made in US dollars. They were first launched in the global debt capital markets when the state-controlled toll road developer and operator, Jasa Marga, priced on November 30 2017 a 4 trillion rupiah trade for three years.
The IFC transaction attracted strong demand from a diverse group of investors, which the IFC says illustrates the growing appetite for socially responsible investment in Indonesia. The bonds will be listed on both the London Stock Exchange and the Singapore Exchange.
IFC vice-president for Asia-Pacific, Nena Stoiljkovic, says the green Komodo bond issuance underscores IFC's commitment to support Indonesia in achieving environmentally sustainable economic growth. The IFC has recently committed US$150 million in the green bonds issued by Bank OCBC NISP, which represented the first ever green bond issued by a commercial bank in Indonesia.
Bank of America Merrill Lynch, J.P. Morgan and Standard Chartered acted as the joint underwriters for the IFC Komodo green bond transaction.
In a Green Bond Impact Report also released on October 8, the IFC disclosed it issued a record 32 green bonds valued at US$1.8 billion in the fiscal year ended June 30 2018. The number of projects supported by IFC's green bond programme has risen to 52 projects from 32 projects in the previous year. The portfolio is anticipated to reduce greenhouse emissions annually by 6.3 million metric tonnes of carbon dioxide equivalent – an increase from 2.2 million metric tonnes in fiscal year 2017.
The IFC green bonds had cumulatively supported 177 investment projects at the close of fiscal year 2018. It issued its first green bond in 2010 and has raised a total of US$7.6 billion across 111 green bond deals as of the end of fiscal year 2018 in 13 currencies.