The International Finance Corporation (IFC), a member of the World Bank Group, has successfully raised AUD 700 million through a 10-year green Kangaroo bond to fund biodiversity and environmental initiatives in emerging markets. This landmark issuance is part of the IFC’s broader efforts to close the biodiversity finance gap and promote sustainable development in regions that are most vulnerable to the impacts of climate change and environmental degradation.
Strong Investor Demand and Market Success
The bond, which carries a 4.90% coupon rate and a spread of 56.48 basis points over the December 2034 Australian Government Bond (ACGB), attracted significant investor interest, with orders totaling nearly AUD 800 million. The strong demand came primarily from central banks and official institutions, highlighting the growing appetite for green bonds and biodiversity finance.
“The issuance reflects the increasing investor focus on biodiversity finance, a rapidly expanding area within the green finance sector,” said Tom Ceusters, Director of Capital Markets and Investments at IFC. The bond’s favorable timing, amid rising global demand for sustainable investments and higher yields, contributed to its success.
Funding Biodiversity and Conservation Projects
Proceeds from the bond will directly support biodiversity conservation, climate adaptation, and ocean protection projects in emerging markets. The funds will be allocated to various initiatives, including reforestation efforts in Latin America and forest regeneration projects in Colombia, such as BBVA Colombia’s biodiversity bond—the first of its kind globally.
The bond issuance also aligns with IFC’s expanded Green Bond Framework, which now includes a broader scope for financing climate adaptation and biodiversity projects. This move underscores the importance of nature-based solutions in tackling global environmental challenges.
A Strategic Move for IFC
With Australian dollar denominated issuances accounting for 19% of IFC’s funding in FY2024, the successful green Kangaroo bond highlights the organization’s ongoing commitment to diversifying its funding sources while advancing environmental sustainability. The bond’s issuance also signals the growing recognition of biodiversity and nature finance as key priorities in the broader green finance ecosystem.
“The Kangaroo market remains a key area for IFC’s fundraising activities, and this bond issuance not only raises awareness about biodiversity and nature finance but also strengthens our global environmental agenda,” stated Manshun Chan of Daiwa Capital Markets Europe.
The green Kangaroo bond marks a significant step forward in the development of the green bond market, emphasizing the importance of financing biodiversity and environmental resilience in emerging markets to drive long-term, sustainable growth.
