IFC Issues 700 Million Australian Dollars Green Kangaroo Bond to Promote Biodiversity in Emerging Markets

Washington, D.C., December 2, 2024—IFC, a member of the World Bank Group, issued a green bond in the Kangaroo market, raising 700 million Australian dollars, to bridge the biodiversity finance gap and advance economic growth in emerging markets.

The 10-year fixed rate note with a coupon of 4.90% priced with a spread of 56.48 basis points over the December 2034 ACGB, equivalent to ASW + 64 basis points.

The transaction attracted strong interest from high-quality investors, including bank treasuries, central banks and official institutions, garnering orders of nearly 800 million Australian dollars, including 70 million from joint lead managers. The trade was arranged by the Australia and New Zealand Banking Group Limited (ANZ), Daiwa Capital Markets Europe, and Nomura International.

"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,” said Tom Ceusters, IFC Director of Capital Markets and Investments. “Funds raised through this issuance will finance projects that conserve, restore and protect biodiversity in emerging markets."

"IFC's transaction was well-timed, as higher outright yields drove strong demand for longer-duration bonds among offshore investors. Recent investor engagement in Asia enabled IFC to capitalize on this trend, with the new bond’s approximately 5% yield proving highly attractive to offshore real-money accounts,” said Brenton Smith, Director, Debt Syndicate at ANZ. The Green bond format added further appeal, encouraging participation from additional investors."

"IFC's agility, supported by their local presence, not only allowed them to get ahead of a busy new year pipeline but also take advantage of steepening yield curves and recent Asian bid for the product,” said Oliver Holt, MD: Head of Debt Syndicate and Origination at Nomura International. This strategy was rewarded with the largest 10 year Supranational trade since 2010, aided by the enhanced green use of proceeds."

"Daiwa was delighted to work on IFC’s new successful 10yr Green Kangaroo issuance that gathered large interest from a wide variety of investors and regions,” said Manshun Chan, Head of AUD Syndicate at Daiwa Capital Markets Europe. “IFC took advantage of a positive market backdrop, whilst raising awareness on the biodiversity and nature finance related projects that are part of the IFC green framework."

The Kangaroo market remains a strategic focus for IFC, with Australian dollar issuances accounting for 19 percent of total funding in fiscal year 2024. IFC has consistently engaged the market to diversify funding and build liquid lines.

In 2022, IFC published the Biodiversity Finance Reference Guide, the world’s first guidance and market framework for biodiversity finance to help investors, financiers, companies and governments identify investments that protect and rehabilitate biodiversity and ecosystems.

Following this publication, IFC has expanded its Green Bond Framework to include biodiversity and ocean and water protection, along with more detailed criteria for climate adaptation and mitigation projects.

The proceeds of this bond will support biodiversity initiatives, such as the BTG Pactual Timberland Investment Group’s Latin American reforestation strategy which focuses on restoration and conservation in key regions, and BBVA Colombia’s biodiversity bond, the world’s first biodiversity bond aimed at regenerating natural forests in Colombia.

Transaction Summary

Issuer: International Finance Corporation (“IFC”)

Format: Kangaroo

Amount: AUD 700,000,000

Pricing date: 27^th November 2024

Settlement date: 5^th December 2024 (T+6)

Maturity date: 5^th December 2034

Coupon: 4.90% s.a. RBA bond basis

Spread: ASW +64 bps s/q | ACGB Dec 2034 +56.48bps | EFP +55.5

Joint-Lead Managers: ANZ, Daiwa, Nomura

Distribution Statistics

Banks: 66%

CB/OI: 27%

Asset Managers: 7%

APAC: 77%

EMEA: 21%

Australia: 3%