World Bank issues $225m Amazon reforestation bond

The World Bank has priced a groundbreaking 9-year, $225 million Amazon Reforestation-Linked Bond, marking its largest outcome bond to date.

This innovative bond links investors’ financial returns to the generation of Carbon Removal Units (CRUs) from reforestation projects in Brazil’s Amazon rainforest, differing from previous bonds tied to carbon credits from avoided emissions.

The bond is 100 per cent principal-protected and mobilises $36 million to support Mombak, a Brazilian company, in reforesting the Amazon, enhancing biodiversity, and fostering socioeconomic development.

The bond offers a fixed guaranteed coupon and a variable component tied to the successful generation and monetisation of CRUs.

Investors, including HSBC, Nuveen, T Rowe Price, Mackenzie Investments, Rathbone Greenbank, and Velliv Pension, have shown strong interest, driven by the bond’s potential for attractive financial returns and significant environmental impact.

The project is aligned with the World Bank’s sustainable development goals, but Mombak’s reforestation efforts are financed independently of IBRD lending.

Attribution: The World Bank report

Subediting: M. S. Salama