Green Bonds Gain Investors and Climate-Friendly Credentials
Institutional investors snapped up the recent $1 billion green-bond offering by International Finance Corp., the World Bank’s private sector division. Banks and pension funds are helping to develop international standards for these increasingly popular bonds, which fund renewable energy and other projects that fight climate change.
By Katie Gilbert
Most mainstream investors like going green as long as they dont have to pay a premium. That reasoning helps explain the crossover success of green bonds, high-grade fixed-income securities whose proceeds fund projects that fight climate change. In February, International Finance Corp., the Washington-based World Bank Groups private sector division, launched its latest green bond offering at $1 billion, the markets biggest yet. The three-year, triple-A-rated bonds, underwritten by Citigroup, J.P. Morgan and Morgan Stanley, were offered at a yield 15 basis points higher than comparable U.S. Treasuries.
Asset manager BlackRock bought its first green bonds in April 2010 and was among the 56 investors in the IFC issue, which was 80 percent oversubscribed. The main driver of $3.8 trillion BlackRocks investment in green bonds is client demand, largely from corporate and public institutions, says....