IFC launches New Zealand’s first green bond

Proceeds from the Kauri issue will fund projects in emerging markets.

The International Finance Corporation has launched New Zealand’s first green bond, which aims to raise at least 100 million New Zealand dollars ($75.4 million; €64.2 million) for financing private sector investments in emerging markets. 

The proceeds from the 10-year fixed-rate Green Kauri Bond will be used to support investments in renewable energy, energy efficiency and other areas that reduce greenhouse emissions, IFC said. Bank of New Zealand is acting as arranger while ANZ Bank and BNZ are acting as the joint lead managers on the bond.

“This bond is a critical step in opening up green and sustainable investing opportunities in NZ dollars,” said Mike Faville, head of debt capital markets at BNZ. “There is a growing awareness of environmental and social issues among local investors, and we hope this transaction helps pave the way for more issuers to move along this path.”

The settlement date for the green Kauri bond issuance is 9 August 2017. 

IFC has issued Kauri bonds for more than two decades, worth more than 5 billion NZ dollars, which were offered to domestic and international investors. The issuance is expected to help further develop the Kauri market and offer opportunities for both issuers and investors in NZ dollar bonds, according to Dean Spicer, head of capital markets in New Zealand at ANZ Bank. 

The World Bank affiliate is also one of the first movers in green bond issuances, having issued its first green bond back in 2008 to fund renewable energy and energy efficiency projects globally. It issued an offshore 500 million Renminbi-denominated green bond in London in 2014 and the first offshore Rupee-denominated green bond in 2015. 

As of this July, IFC has issued approximately $6 billion in green bonds, including two benchmark $1 billion issuances, which were the largest in the market at that time.