IFC’s Pioneering Komodo Green Bond Raises $134 Million for Climate Investments in Indonesia
IFC, a member of the World Bank Group, has issued its inaugural Indonesian Rupiah Komodo green bond, attracting strong investor demand and raising 2 trillion IDR—the equivalent of $134 million in U.S. currency—to combat climate change.
This is the first such green Komodo offshore Rupiah-denominated issuance by a multilateral development bank for investment into climate projects in Indonesia. The strong interest from a diverse group of international investors is testament to the growing appetite for socially responsible investment in Indonesia.
The five-year green bond, which will be listed on both the London Stock Exchange and the Singapore Stock Exchange, will support the local-currency market in Indonesia, funding the first-ever green bond issued in Indonesia by an IFC client, Bank OCBC NISP. The proceeds will finance underlying infrastructure and climate-related projects, in accordance with Green Bond Principles.
“The issuance of IFC’s green Komodo bond underscores our commitment to support Indonesia in achieving environmentally sustainable economic growth,” said Nena Stoiljkovic, IFC’s Vice President for Asia and the Pacific. “The bond allows us to mobilize international funding into Indonesia’s climate-friendly projects and we intend to replicate and scale up this model to address the country’s climate challenges.”
Jingdong Hua, IFC’s Vice President and Treasurer, said: “This first-ever green Komodo bond issued in Indonesian rupiah for climate investment in Indonesia is a significant milestone for IFC and for Indonesia, helping the private sector manage foreign exchange risk through local-currency financing, while growing climate-smart business.”
Adrien de Naurois, EMEA Syndicate, BAML said: “IFC’s inaugural Green IDR offering firmly established its presence in the nascent Komodo, where it was able to take advantage of the recent stability in IDR and post Bank Indonesia’s meeting to raise 2 trillion IDR of 5-year offering. The transaction garnered strong global support and allowed IFC to push the boundaries on both tenor and size achievable in the current market environment.”
John Lee Tin, Head of SSA DCM, J.P. Morgan said: “Investors reacted positively to IFC’s debut Komodo (Indonesian Rupiah) transaction, with the eurobond issue attracting more demand than originally intended. Given current volatility in emerging markets, the deal’s oversubscription represents a high level of success. Additionally, IFC widened out the scope of its green bond reach with investors, using this as an opportunity to add a new currency, hence a new investor base, for the issuer’s climate awareness efforts.”
Henrik Raber, Global Head, Credit Markets, Standard Chartered Bank, said: “Standard Chartered is committed to the development of more carbon-efficient financing solutions in our footprint markets and we are proud to partner with IFC on this landmark issuance. The strong investor response to IFC’s transaction highlights the increasing focus and importance the global investor community is placing on supporting sustainable financing solutions to help tackle climate change.”
Since launching the Green Bond Program, IFC has raised billions of dollars for clean energy, climate-smart cities, green buildings and green finance.
As revealed in IFC’s Green Bond Impact Report released today, IFC issued 32 green bonds totaling $1.8 billion—a record green bond issuance for IFC—in the fiscal year that ended June 30, 2018. The number of projects supported by IFC’s Green Bond Program has surged to 52 projects in FY18, from 32 projects in FY17—an all-time high number and volume of green bond-financed projects. The portfolio is anticipated to reduce greenhouse gas emissions annually by 6.3 million metric tons of carbon-dioxide equivalent—an increase from 2.2 million metric tons in FY17.
At the close of FY18, IFC green bonds had supported cumulatively 177 investment projects.
IFC issued its first green bond in 2010 and as of end FY18 has issued a total of $7.6 billion across 111 green bonds in 13 currencies and helped client banks in the Philippines, Indonesia, and other countries do the same.
IFC Green Komodo Bond Terms and Conditions
Issuer: IFC (International Finance Corporation)
Rating: S&P AAA (stable) / Moody’s: Aaa (stable)
Settlement date: October 9th, 2018
Maturity date: October 9th, 2023 (5yr)
Size: IDR 2 trillion
Re-offer Yield: 8.00% s/a
Clearing: Euroclear / Clearstream
FX Settle: Coupon/Principal settled USD at applicable FX
FX Fixing Date: T+1 from Pricing date (October 1st, 2018)
Governing Law: New York
Denomination: IDR 100 million
Listing: London Stock Exchange / Singapore Exchange
Underwriters: Bank of America Merrill Lynch/J.P. Morgan /Standard Chartered Bank