Ford and Microsoft invest in $1 billion bond for climate projects

Ford and Microsoft were among investors in a $1 billion green bond launched last week to support “climate smart” investments in emerging markets.

It marks the second $1 billion green bond transaction this year from the International Finance Corporation (IFC), an Aaa/AAA rated global development institution and member of the World Bank Group.

Proceeds of IFC green bonds are used for private sector investments in renewable energy, energy efficiency and other areas that reduce greenhouse gas emissions, such as installing solar and wind power capacity and providing financing for technology that helps produce energy more efficiently.

IFC said in a statement that the bond transaction, jointly led by BofA Merrill Lynch, Citigroup, Crédit Agricole CIB and SEB, was heavily oversubscribed and sized to address the demand from “an increasing number of investors interested in climate-related opportunities.” The final order book contained 50 orders from investors such as BlackRock, Deutsche Bank Asset and Wealth Management, Ford Motor Company and Microsoft.

Bond issues are seen as an increasingly important way to raise funds for green projects, with the green bond market now estimated at $346 billion after doubling over 2012.

Progress is being made with bonds of all sizes, ranging from relatively small issues from individual companies to the huge issues being orchestrated by the likes of IFC. Earlier this year, green power company Good Energy raised $24 million to expand its renewable energy portfolio — three times its initial target — while in April the European Investment Bank secured $80 million from a bond issue to invest in renewable power and energy efficiency projects.

The latest deal was hailed as a milestone for the growing green bond market and a demonstration of how the capital market can play an important role in driving climate finance.

Pierre Blandin, global head of DCM-SSA origination at Crédit Agricole, said: “This second IFC benchmark Green Bond demonstrates the far-reaching investor interest into liquid, benchmark-sized issue whose proceeds will fund environmental-related projects.”

This article originally appeared at Business Green.

US dollar bill image by Vasiliy Koval via Shutterstock.