The Climate Investment Funds (CIF) Capital Markets Mechanism (CCMM) has made its debut in the climate finance sector with the issuance of its first bond, raising $500 million.
The CCMM, which aims to mobilise capital to drive climate action and sustainable development, was oversubscribed, with an order book totalling more than $3 billion from investors around the world.
As CIF put it in a statement, it ‘marks the launch of a new era in climate finance’.
The inaugural bond is rated AA+/Aa1 by Fitch and Moody’s, and offers a semi-annual yield of 4.838% with a maturity date of January 22, 2028. It is listed on the international securities market of the London Stock Exchange.
‘A historic moment’
“Today is a historic moment for climate finance. The inaugural CCMM bond issue has exceeded all expectations, with our order book over six times over-subscribed,” commented Tariye Gbadegesin, CEO, Climate Investment Funds.
“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.”
The bond’s proceeds will be used to fund the Clean Technology Fund (CTF), which focuses on accelerating the deployment of low-carbon technologies such as renewable energy, energy efficiency, sustainable transport, and industry decarbonisation in developing countries.
Investor interest was strong, with the bond attracting diverse participation from asset managers/insurance/pension funds (51%), central banks/official institutions (36%) and banks/bank treasuries/corporates (13%).
Geographically, the majority of investments came from Europe, the Middle East, and Africa (64%), followed by the Americas (31%) and Asia (5%).
‘Global support’
CCMM treasury manager Anshula Kant, managing director and CFO of the World Bank, added, “We are grateful for the global support from investors to successfully launch this inaugural bond. By helping mobilise private capital, this ambitious programme will contribute financing to clean energy projects and investments in emerging economies, building a sustainable future for all.”
The debut issuance is a result of a collaboration between CIF, its implementing partners, and various banks – Bank of America, BNP Paribas, HSBC, and TD Securities acted as lead managers, while multilateral development banks (MDBs) including the African Development Bank, Asian Development Bank, and World Bank affirmed their commitment to using these funds to support transformational climate projects.
“This milestone exemplifies the power of collaboration between multilateral development banks and the private sector in mobilising innovative financing solutions for climate action,” commented Bruno Carrasco, director general, Climate Change and Sustainable Development Department, Asian Development Bank. Read more here.
