February 22, 2010 / 1:28 PM / 10 years ago

World Bank green bonds issuance passes $1 bln

LONDON (Reuters) - Swedish institutional investors subscribed for “green” bonds issued by the World Bank on Monday, taking total such financing to over $1 billion, lead manager SEB bank said on Monday.

Investors buy these bonds at a fixed or floating interest rate and the World Bank in turn lends the capital to low-carbon projects in developing nations at much lower rates than they could ordinarily obtain due to political and exchange rate risks.

The latest issuance, worth 500 million Swedish crowns ($69.25 million), drew investors including WWF-Sweden, the Church of Sweden, European private banks and life insurance companies, and the Swedish National Pension Fund AP3, said the World Bank and Sweden’s SEB in a statement.

The new bond issuance took total World Bank green bond financing to more than $1 billion.

“The World Bank green bond provides a good investment and a safe return,” said Klas Eklund, Senior Economist, SEB. The latest issuance would mature in 2017 and pay a coupon of 3.25 percent.

The World Bank initiative is considered one possible way to drive private sector investment to cut greenhouse gas emissions and prepare for more extreme weather in developing countries.

A World Resources Institute analysis last week calculated that rich country pledges so far fell short of $30 billion commitments to fight climate change in developing countries from 2010-2013, pledged under the “Copenhagen Accord” agreed at a U.N. summit in the Danish capital in December.

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