World Bank raises $350m through "green bonds"

The World Bank has this week announced that it has raised approximately $350m through the issuance of its first wave of "green bonds" specifically designed to invest in low carbon projects in developing economies.

The bonds, which were issued to a number of Scandinavian investors in partnership with Swedish bank SEB, will mature after six years and promise attractive returns at rates 3.15 per cent per annum - 0.25 per cent above Swedish government bond rates.

The bank said that funds raised through the issuance will be used to invest in emission reduction projects in developing countries, including solar and wind energy projects, upgrades to existing power plants, and forestry protection initiatives.

World Bank president Robert Zoellick said that the "green bonds" were a prime example of the way in which the bank can adapt traditional funding mechanisms to help mitigate the risk of climate change.

"Tackling climate change is going to take immense resources that will only come from a well-orchestrated flow of public and private finance," he said. " This transaction is an important early effort to show one way in which this can be done."

SEB president and chief executive Annika Falkengren said that in addition to providing a new facility to increasingly influential environmentally conscious institutional and private investors the new bonds would represent an attractive proposition to conventional investors.

"With this issue, we have been able to offer our clients a product through which they can accomplish three things," she said. "Take a stand towards fighting global warming; support the World Bank and its members in their efforts to fight poverty; and secure a higher return than government securities by investing in the World Bank’s Aaa/AAA-rated bonds."