1

Mobilizing private finance

for climate through green
bonds: Experiences of IFC
Lima Climate Finance Week
Lima, Peru !"#!$ %ugust !&1'
!
Climate change is no( ac)no(ledged to be one
of the greatest challenges facing our planet.
*lobal (arming could erode or reverse the
worlds gains in economic development+
Massive investment in mitigation and adaptation
is re,uired to avoid a (armer (orld+
Investment from the private sector is much
needed+ -o(ever, the private sector is reluctant
to invest (here the returns are not
commensurate (ith ris)s+
IFC believes there is great potential in leveraging
private sector climate-related investment
through multilateral development ban)s+
% .trategic Priorit/
Overview of IFC
!
IFC0s 1ole in the Climate .pace
3
IFC0s Climate 2usiness at a *lance
Overview of IFC
3
IFC0s 1ole in the Climate .pace
Clean Energ/ 3
Energ/ %ccess
4'5
1esource
Efficienc/
'&5
6ther
Mitigation
"5
7includes first
Climate
Adaptation
deal done in
F8!&13)
IFC has committed over US!" #illion for climate change pro9ects since
entering this arena in !&&4+
$hree focus areas:
1+ Clean Energ/ and
Energ/ %ccess
!+ 1esource Efficienc/
3+ Climate %daptation
'
IFC0s
*reen
2ond
Program
4
% Pioneer in *reen 2onds
4
IFC0s *reen 2ond Program
IFC has pla/ed a pioneering role in creating investment opportunities
(hich support climate change#related pro9ects+
IFC0s green bond proceeds are held in a separate account for investing
exclusivel/ in rene(able energ/, energ/ efficient, and other climate#
friendl/ pro9ects+
.ince our inaugural issue in !&1&, IFC
has raised US%.& #illion through its
green bond program, including a
landmar) :.;1 billion three#/ear public
issue in Februar/ !&13, the markets
largest ever green #ond issuance and a
subse,uent :.;1 billion three#/ear issue
in <ovember !&13+
*reen bonds are consistentl/ priced in
line (ith IFC0s vanilla curve+
"
=hat Ma)es a *reen 2ond Green>
"
IFC0s *reen 2ond Program
*reen bond proceeds are earmar)ed for pro9ects and activities that promote
climate or other environmental sustainabilit/ purposes+
Criteria for use of proceeds
?hird part/ opinion
Process for pro9ect selection
1inged#fenced funds
1eporting
?ransparenc/ and assurance
7
*reen 2ond Formats
7
IFC0s *reen 2ond Program
Issuing public deals create a
crowding in' effect and
heightened sociall/
responsible investing 7@.1IA)
a(areness
Eligible for investors (ith
large minimum deal sizes
Large li,uid transactions
facilitate secondar/ trading
Private placements allo( for
customi(ation
Currencies
?enor flexibilit/
Floating rate index
flexibilit/
Potential for structure
2u/ and hold investments
Public ?ransactions Private Placements
$
*reen 2ond Cash Flo(s
$
IFC0s *reen 2ond Program
*reen bond proceeds are earmar)ed for pro9ects and activities that promote
climate or other environmental sustainabilit/ purposes+
S
)
I

*

+
S
G

i
n
v
e
s
t
o
r
s
Cash
Fi,ed
Coupon
-a.ment
and
)edemption
General Account
Climate-
related
pro/ects
General
Investment
-ortfolio
Local 0anks *
Financial
Intermediaries
Special Su#-
-ortfolio for
+ligi#le -ro/ects
Green
0ond
-roceeds
9
?he 6pportunit/ for Investors
9
IFC0s *reen 2ond Program
Financial returns for fixed income investors
IFC0s triple#% rating and due diligence
.ocial and environmental impact
Balue#added
investment
opportunit/
1&
Case .tud/: IFC0s Inaugural 2enchmar) *reen 2ond
1&
IFC0s *reen 2ond Program
$ransaction 0ackground and 1ighlights
Largest ever *reen 2ond, establishing a debut
li,uid benchmar) reference for all investors (ho
(ish to be associated (ith the .ociall/
1esponsible Investments 7.1I) sector
.uccessful diversification of the IFC investor
base (ith man/ :. *reen and .1I funds
participating alongside non#dedicated .1I
accounts (ho are motivated to participate
because of the climate friendl/ nature of the
instrument
Pricing in line (ith IFC0s bonds+ <o premium to
traditional bonds
Issuer International Finance Corp
Rating Aaa / AAA
Issuer Amount USD $1,000,000,000
Pricing Date February 1, !01"
#aturity #ay 1$, !01$
Coupon 0%&0' Semi(Annually "0/"$0
Re(o))er Sprea* US+ , 1& bps
Re(o))er Price --%.01
Re(o))er /iel* 0%&$!'
Format 0lobal
1oint 2ea* #anagers 1%P% #organ, Citigroup, #organ Stanley
Use o) Procee*s +3e 4on* Procee*s are reser5e* )or )inancing
climate()rien*ly pro6ects accor*ing to t3e IFC
70reen 4on* Criteria8
Offering 2etails
%mericas
7&5
EME%
!45
%sia
45
%sset Managers
3&5
Corporations
175
6fficial
Insitutions
1"5
Central 2an)s
1"5
Pension3
Insurance
135
2an)s
$5
2istri#ution #. )egion 2istri#ution #. Investor $.pe