News - 09 October 2018

IFC's Inaugural Komodo Green Bond Raises $134m for Climate Investments in Indonesia

Reuters Photo/David Gray

Nusa Dua. The International Finance Corporation, the private-sector arm of the World Bank Group, has raised Rp 2 trillion ($134 million) from its inaugural rupiah-denominated Komodo green bond to fund investment projects focused on tackling climate change.

The five-year Komodo green bond, offered at a coupon rate of 8 percent, will be listed on the London Stock Exchange and Singapore Exchange, the IFC said in a statement on Monday (08/10).

The bond has seen strong demand from diverse investor groups, showing a growing appetite for environmental and socially responsible investment in the country.

"The bond allows us to mobilize international funding into Indonesia's climate-friendly projects," Nena Stoiljkovic, IFC vice president for Asia and the Pacific, said in the statement.

Bank of America Merryl Lynch, J.P. Morgan and Standard Chartered Bank will act as underwriters.

The proceeds from the bond will be used to fund infrastructure and climate-related projects in Indonesia, in accordance with green-bond principles.

The IFC said the proceeds will be allocated for an investment worth $150 million in green bonds issued by Bank OCBC NISP, Indonesia's 10th-largest lender.

Jingdong Hua, IFC vice president and treasurer, said the first-ever Komodo green bond would help the firm to mitigate foreign-exchange risks through local-currency financing.

"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," said John Lee Tin, head of sovereign, supranational and agency, and debt capital markets at J.P. Morgan.

The IFC has issued 32 green bonds worth $1.8 billion in total as of June this year. It expects to fund 52 projects through its green bond program this year.

The lender seeks to reduce greenhouse gas emissions by 6.3 million metric tons annually through green bond issuances and investment in sustainable projects.

Source: Jakarta Globe