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The ESG Phenomenon – Citigroup, IBRD, World Bank

Editorial Staff

17 May 2024

Citigroup, IBRD, World Bank
Citigroup has acted for a World Bank (International Bank for Reconstruction and Development, IBRD) deal that raises $100 million of debt finance, part of which helps pay for a plastic waste reduction programme. The bond carries a seven-year maturity. 

Returns on the debt are linked to credits for collecting and recycling plastic waste via projects in Ghana and Indonesia.

In the transaction, Citigroup acted as the lead.

The debt issuance is an example of the green bond trend that has been in evidence for several years. 

Outcomes from the waste-reduction/recycling projects are measured against plastic and carbon credits issued on the Verra Registry, Citigroup said in a statement.

Investors are providing about $14 million in up-front financing required by the projects.

“Given the huge needs for development, channelling private capital to support development challenges has been a fundamental part of our work. Outcome bonds, like the Plastic Waste Reduction-Linked Bond align incentives, so that investors benefit financially when positive development outcomes are achieved,” Anshula Kant, managing director and World Bank group chief financial officer, said.

The bond’s issuers said the debt is 100 per cent principal protected with the $100 million proceeds used to support the World Bank’s sustainable development activities globally.

The plastic collection and recycling projects in Ghana and Indonesia are not World Bank projects. Investors in the bond will forego a portion of ordinary coupon payments, with the equivalent amounts instead being provided, through a hedge transaction with Citigroup, to support the financing of the projects selected by Plastic Collective UK, who manage the projects' plastic and carbon credit programmes. In return, the investors will receive annual coupons composed of a fixed amount plus payments linked to the sale of a portion of the plastic and carbon credits produced by the projects.