The Climate Investment Funds (CIF), a multilateral initiative, has issued a $500 million debut bond, marking a significant step in diversifying its funding sources and attracting private sector investment to support low-carbon technologies in emerging markets. The bond, issued under CIF’s Capital Markets Mechanism, is part of a broader strategy to mobilise climate finance at a time of declining development aid and growing calls for efficient capital use.
The three-year bond was priced at 36.6 basis points over US Treasuries, offering a 4.75% coupon. The issuance was six times oversubscribed, with investors placing orders exceeding $3 billion. Around 80 investors participated, with a higher allocation to private sector participants than comparable World Bank deals, according to Andrea Dore, Global Head of Funding at the World Bank, which manages CIF’s Capital Markets Mechanism.
“The whole idea is to crowd in private sector funding to fight climate change, and we were able to achieve it,” Dore said.
The bond issuance comes as CIF seeks to establish sustainable funding channels to finance its Clean Technology Fund, which focuses on initiatives such as battery storage, coal transition, and clean technology. CIF Chief Executive Tariye Gbadegesin emphasised the importance of creating reliable financial mechanisms, especially as overseas development assistance declines and political and economic uncertainties loom.
“You will always have pendulum shifts, whether political or economic. The challenge is to establish multiple funding sources to tackle the climate crisis and invest in the energy transition,” Gbadegesin said.
Since its establishment in 2008, CIF has approved $7.4 billion for projects in countries including Argentina, Brazil, and India, working through six multilateral lenders, including the World Bank. Backed by nations such as Britain, Japan, and Canada, which have collectively pledged $12 billion, CIF remains one of the world’s largest multilateral funds dedicated to scaling climate solutions in developing nations.
The debut bond signals the beginning of regular market issuances under CIF’s Capital Markets Mechanism, designed to secure private sector investment and ensure a steady flow of capital to fund its climate initiatives. Regular access to capital markets is also expected to strengthen CIF’s financial resilience against political and economic fluctuations, Gbadegesin noted.
