IFC Issues $20M Azerbaijani Manat Bond to Support MSMEs and Green Projects

The bond also contributes to the diversification of the investor base for local currency issuances, helping to enhance market liquidity and attract additional long-term financing.

The International Finance Corporation (IFC), a member of the World Bank Group, has successfully issued a four-year bond denominated in Azerbaijani manat (AZN), raising 34 million AZN (approximately $20 million). The bond aims to increase access to local currency financing for micro, small, and medium-sized enterprises (MSMEs) in Azerbaijan, with a focus on supporting low-income households and funding green projects to accelerate the country’s sustainable development.

The bond, which is listed on the Luxembourg Stock Exchange, plays a critical role in expanding access to climate finance, especially for businesses focused on environmentally sustainable projects. By providing MSMEs and low-income households with access to local currency financing, the bond will help boost climate-focused initiatives, including projects designed to promote green technologies and support the growth of renewable energy and energy-efficient solutions.

The issuance is managed by Standard Chartered Bank, which acted as the dealer for the bond. The funds raised will be deployed to enhance social resilience and ensure that green technologies reach a broader segment of the population, particularly in Azerbaijan’s underdeveloped regions.

Reducing Currency Risks and Diversifying the Economy

One of the key benefits of this bond is that it enables businesses to access financing in local currency, thus mitigating the risks associated with foreign currency borrowing. According to Keshav Gaur, IFC’s Director of Treasury Client Solutions, “By leveraging capital markets, IFC enables businesses to access local currency financing, reducing the risks of foreign currency borrowing.” This, in turn, helps reduce currency mismatches and improves economic resilience, a crucial factor for long-term economic growth and stability in Azerbaijan.

Moreover, the bond is designed to assist in the diversification of Azerbaijan’s economy, a priority for the country as it seeks to transition from its reliance on the oil and gas sectors to a more diversified, sustainable economic base. It aligns with broader efforts to promote green finance and private sector development.

Investor Confidence and Market Liquidity

The bond also contributes to the diversification of the investor base for local currency issuances, helping to enhance market liquidity and attract additional long-term financing. Theodor Kirshner, Fund Manager at Capitulum, one of the bond’s investors, stated, “We value our long-standing collaboration with IFC, which has consistently provided us with access to local interest rates in attractive emerging markets, such as Azerbaijan, while ensuring the transparent and sustainable use of proceeds.” This reflects investor confidence in the IFC's commitment to transparent, sustainable financing in emerging markets.

Since 2020, IFC has issued over $189 million in AZN bonds for tenors ranging from one to four years, offering attractive interest rates that are up to 300 basis points below the government benchmark. These issuances play an important role in developing the local bond market, ensuring that the country has access to both short-term and long-term financing.

IFC’s Commitment to Sustainable Growth

The IFC continues to support Azerbaijan's growth by facilitating access to local currency financing and promoting sustainable business practices. This new bond issuance represents a continued effort to drive economic resilience, empower MSMEs, and support environmentally sustainable projects in Azerbaijan. It also highlights the crucial role that the IFC and capital markets play in creating an enabling environment for private sector growth and green investment in emerging markets.

This bond issuance is part of a broader strategy by the IFC to create long-term growth opportunities for Azerbaijan, encouraging the development of green technologies, supporting the climate transition, and building a resilient economy that benefits all sectors of society.