The Climate Bond Initiative said securitization is an ideal way to unlock further funding for the International Finance Corporation's “green” bonds.
The IFC, a member of the World Bank, issued its first green bond in April of 2010. Proceeds of the four-year $200 million fixed bond were set aside in a separate green account for investing exclusively in climate-friendly projects in developing countries, according to the IFC website.
In February this year, the IFC issued its biggest “green” bond to date, a $1 billion, 3-year, triple-A rated bond tied to climate investments.
Sean Kidney, Chair of the Climate Bonds Initiative said in a blog post yesterday that securitizing some of these existing climate change related loans would stretch the IFC's balance sheet and with a bit of credit enhancement the securitized bonds could be rated up to a single-A.
Kindey believes this could create some yield opportunity for traditional securitization investors, like insurance and pension funds; meanwhile the IFC would get “to more quickly recycle capital in climate investments,” he said.