IFC Issues $700M Green Kangaroo Bond to Support Biodiversity Finance and Economic Growth

The Kangaroo market remains a strategic priority for IFC, with Australian dollar issuances making up 19 percent of its total funding in fiscal year 2024.

The International Finance Corporation (IFC), a member of the World Bank Group, has issued a green bond in the Kangaroo market, raising 700 million Australian dollars (approximately $452 million) to address the biodiversity finance gap and foster economic growth in emerging markets. The 10-year fixed-rate note offers a coupon of 4.90% and was priced at a spread of 56.48 basis points over the December 2034 Australian Commonwealth Government Bond (ACGB), equating to ASW + 64 basis points.

The bond issuance saw substantial demand, with orders surpassing 800 million Australian dollars, which included 70 million from joint lead managers. The issuance was arranged by Australia and New Zealand Banking Group Limited (ANZ), Daiwa Capital Markets Europe, and Nomura International. The strong investor participation, from key players like bank treasuries, central banks, and official institutions, highlights the growing interest in biodiversity finance as an emerging and essential sector in green finance.

Tom Ceusters, IFC Director of Capital Markets and Investments, expressed excitement about the bond’s reception, stating, "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. Funds raised through this issuance will finance projects that conserve, restore, and protect biodiversity in emerging markets."

Strategic Timing and Investor Appeal

The bond was strategically timed, benefiting from higher yields that increased demand for long-duration bonds, particularly among offshore investors. According to Brenton Smith, Director of Debt Syndicate at ANZ, "Recent investor engagement in Asia enabled IFC to capitalize on this trend, with the new bond’s approximately 5% yield proving highly attractive to offshore real-money accounts.” The green bond format further added to the appeal, attracting a broader pool of investors.

Oliver Holt, Head of Debt Syndicate and Origination at Nomura International, noted the strategic timing, saying, "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 the recent Asian bid for the product.”

Focus on Biodiversity and Nature Finance

The proceeds from the green Kangaroo bond will directly support initiatives focused on biodiversity and nature protection. Notable projects include BTG Pactual Timberland Investment Group’s Latin American reforestation strategy, which focuses on ecosystem restoration and conservation in key regions. Another major beneficiary is BBVA Colombia, which has issued the world’s first biodiversity bond aimed at regenerating natural forests in Colombia.

Manshun Chan, Head of AUD Syndicate at Daiwa Capital Markets Europe, added, “Daiwa was delighted to work on IFC’s 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 on the biodiversity and nature finance-related projects that are part of the IFC green framework."

IFC’s Strategic Role in Biodiversity Finance

The Kangaroo market remains a strategic priority for IFC, with Australian dollar issuances making up 19 percent of its total funding in fiscal year 2024. IFC continues to leverage this market to diversify its funding sources and strengthen its financial base for supporting long-term projects in emerging markets.

In 2022, IFC launched the Biodiversity Finance Reference Guide, a groundbreaking framework that provides guidance on identifying investments that protect and rehabilitate biodiversity and ecosystems. Since then, IFC has expanded its Green Bond Framework to encompass biodiversity, ocean, and water protection projects, along with new criteria for climate adaptation and mitigation efforts.

Strengthening IFC’s Commitment to Sustainable Development

Through this green bond issuance, IFC reaffirms its commitment to supporting projects that foster sustainable economic growth while addressing climate change and biodiversity loss. As the leading supranational investor in the green finance space, IFC’s efforts are paving the way for a more sustainable future by connecting investors with high-impact environmental projects in emerging markets.

The $700 million raised in this green Kangaroo bond is set to catalyze essential funding for biodiversity initiatives, ensuring that the world’s ecosystems are protected, restored, and preserved for future generations.