The International Finance Corporation (IFC), a member of the World Bank Group, has raised AUD 700 million (US $455 Million) through a green bond issuance in the Kangaroo market to support biodiversity finance and promote economic growth in emerging markets. The 10-year fixed-rate bond carries a 4.90% coupon and was priced at a spread of 56.48 basis points over the December 2034 Australian Government Bond (ACGB), equivalent to ASW +64 basis points.
The issuance, the largest 10-year supranational trade in the Kangaroo market since 2010, attracted nearly AUD 800 million (US $520 million) in orders from high-quality investors, including bank treasuries, central banks, and official institutions. Distribution statistics show that 66% of the bond was allocated to banks, 27% to central banks and official institutions, and 7% to asset managers. Geographically, 77% of the allocations went to APAC, 21% to EMEA, and 3% to Australia. ANZ, Daiwa Capital Markets Europe, and Nomura International managed the transaction.
“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.”
The proceeds from the bond will support biodiversity initiatives, including BTG Pactual Timberland Investment Group’s Latin American reforestation strategy and BBVA Colombia’s biodiversity bond, the world’s first aimed at regenerating natural forests. These projects align with IFC’s expanded Green Bond Framework, which now encompasses biodiversity, ocean, and water protection.
Brenton Smith, Director of Debt Syndicate at ANZ said, “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 capitalise on this trend, with the new bond’s approximately 5% yield proving highly attractive to offshore real-money accounts.”
Oliver Holt, Managing Director at Nomura International, highlighted IFC’s strategic approach and said, “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. This strategy was rewarded with the largest 10-year Supranational trade since 2010, aided by the enhanced green use of proceeds.”
Manshun Chan, Head of AUD Syndicate at Daiwa Capital Markets Europe added, “Daiwa was delighted to work on IFC’s new successful 10-year Green Kangaroo issuance that gathered large interest from a wide variety of investors and regions. IFC took advantage of a positive market backdrop while raising awareness of 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 comprising 19% of its total funding in fiscal year 2024. This bond reinforces IFC’s leadership in biodiversity finance, following its publication of the Biodiversity Finance Reference Guide in 2022, the world’s first framework for identifying investments that protect and rehabilitate ecosystems.
