IFC Issues its First Green Bonds in South African Rand, Supporting Climate-Smart Investments
IFC, a member of the World Bank Group, recently successfully issued a green bond denominated in South African rand, raising the equivalent of approximately $71 million for climate-friendly investments in emerging markets.The ZAR 1.0-billion (South African rand) issuance marks the first time a green bond has been issued in South Africa by a multilateral institution. IFC has also issued green bonds in the Chinese and Indian currencies as part of a strategy to develop the green bond asset class in emerging markets.
“Green bonds are a powerful force for mobilizing international and domestic savings for climate finance,” said IFC Vice President and Treasurer Jingdong Hua, who is in Cape Town for the 13th Annual African Capital Markets Conference. He added: “IFC will continue to work with RMB, Standard Bank, and other African partners to bring capital-market solutions to key development challenges in the region.”FirstRand Bank Limited, one of South Africa’s largest banking groups, is the anchor investor in the nine-year bond. Rand Merchant Bank is the sole manager for the transaction.
“Climate change is a very real concern with an impact on everyone, including our stakeholders and their communities,” said Andries du Toit, Group Treasurer, FirstRand Bank Limited. “This transaction demonstrates our continued commitment to support low-carbon development in South Africa. It paves the way for additional issuers to tap South Africa’s green bond market.”IFC will use the proceeds to support investments in renewable energy, energy efficiency, and other areas that reduce greenhouse emissions. Funding raised from IFC green bonds are allocated within IFC in a separate account, and inclusion criteria for eligible investments are independently verified by the Center for International Climate and Environmental Research-Oslo, or CICERO.
The total new issuance raised over the past five years under IFC’s Global Green Bond Program is approaching $4.5 billion. Between July 2014 and June 2015 alone, 38 investments received IFC’s green-bond financing. These investments are expected to reduce greenhouse emissions by the equivalent of 2.5 million metric tons of carbon dioxide per year—a result similar to taking 500,000 cars off the road.This transaction is also the debut issuance of IFC notes on the Johannesburg Stock Exchange (JSE) under its Global Medium-Term Program. Standard Bank of South Africa Limited is IFC’s JSE Debt Sponsor. Bowman Gilfillan Inc. is the legal advisor for this program in South Africa.