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World Bank issues first sustainable water bond

Image World Bank Group: Ha Makhoathi Bridge – Water Projects, Lesotho

The World Bank has issued its first sustainable development bond to raise awareness for water and ocean resources.

The Bank has priced a SEK 1 billion 7-year bond, the first in a series of Sustainable Development Bonds issued to raise awareness for the critical role that water and ocean resources play in development around the world.

The World Bank launched the new Sustainable Development Bond series at World Water Week in Stockholm last week. The bonds aim to raise at least US$3 billion and will provide investors with an opportunity to highlight their support for the Sustainable Development Goals (SDGs) that address water, sanitation and marine protection.

The focus for the new series is to highlight Sustainable Development Goal SDG6 which covers clean water and sanitation and SDG14 which addresses life below water.

Swedish investors AP1, SEB Företagsobligationsfond, SPP Storebrand and Swedbank Robur Fonder AB were among the key European institutional investors investing in the transaction. SEB is the sole lead manager for the transaction.

Arunma Oteh, World Bank Vice President and Treasurer, commented:

“We are very pleased to price this SEK-denominated Sustainable Development Bond, so soon after we announced our new initiative. The demand for this bond shows that investors are aware of the critical need to protect water, our most precious resource, and to ensure a sustainable future.

“This demonstrates SEB’s continued leadership on sustainability, and is reminiscent of our partnership with SEB and Swedish investors 10 years ago, in issuing the first labeled green bond. We appreciate the increased interest in the Sustainable Development Goals and the World Bank’s work.”

Christopher Flensborg, Head of Climate & Sustainable Finance at SEB said the Bank’s decision to launch an initiative to raise awareness for the health of oceans and urgent need for clean water through their sustainable development bond issues, is very much welcomed by investors. SEB is seeing increased interest from investors to understand risks around water management and the need to protect oceans, he added.

With annual issuances between US$50-US$60 billion annually, all World Bank bonds support the financing of Sustainable Development Goal projects. World Bank bonds are aligned with the sustainability bond guidelines published by the International Capital Markets Association (ICMA).

The World Bank is also a member of the Executive Committee of the Green Bond Principles. A key priority for the World Bank’s engagement in the capital markets is to build strategic partnerships with investors to raise awareness for the role of private sector financing in development.

The focus on water and new oceans has attracted first-time investors to World Bank bonds.

Helena Lindahl, Senior Portfolio Manager at Storebrand commented:

“Water is the driver of nature. We at SPP Storebrand welcome IBRD’s effort to issue a bond which highlights the critical water topic. In the coming years, we need to scale up investments in infrastructure related to water tremendously. Raising awareness is a welcomed first step.”

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