The World Bank (International Bank for Reconstruction and Development, IBRD) has issued the Amazon Reforestation-Linked Outcome Bond, a USD 225 million bond aimed at supporting reforestation activities in the Amazon. Priced on August 13, 2024, and due July 31, 2033, this nine-year bond links investors’ financial returns to measurable development outcomes.
Outcome bonds are designed to attract capital by offering a lower guaranteed return than ordinary bonds. The differential between the ordinary return and the fixed return is used to support specific projects—in this case, reforestation efforts by Mombak, a Brazilian company. This structure ensures that the principal is fully protected while mobilizing additional funds for sustainable development activities globally.
The transaction has garnered interest from both repeat and new investors. Among those leading the investment are Nuveen, T Rowe Price, Mackenzie Investments, Rathbone, and Velliv. Additional participants include AP2, Azimut Group, IMPAX Asset Management Group plc., Muzinich & Co., and RBC BlueBay Asset Management.
Ole-Petter Langeland of AP2 remarked on the benefits of outcome bonds: “AP2 is very excited to continue our cooperation with the World Bank... We are pleased that the transaction can support AP2’s three key areas as part of its sustainability strategy: Climate, Biodiversity and Human Rights.”
Giorgio Medda of Azimut Group highlighted their participation: “Azimut Group is very proud to be an investor in the innovative World Bank Amazon Reforestation-Linked Outcome Bond... Through their participation in this bond... [we] are helping to provide direct and measurable impact outcomes.”
Tony Trzcinka from IMPAX added: “Impax is honored to partner with the World Bank on this innovative bond helping to support reforestation.”
Hadiza Djataou from Mackenzie Investments emphasized innovation: “This transaction... offers a landmark opportunity in nature positive investment while supporting land stewardship principles.”
Tatjana Greil Castro of Muzinich noted their ongoing commitment: “We are proud to continue to partner with the World Bank... The outcome bond structure designed by the World Bank offers private investors [a chance] to invest in high impact projects whilst protecting on the downside.”
Stephen M. Liberatore from Nuveen pointed out their significant involvement: “We are excited to be the largest investor in [this] innovative transaction...”
Stuart Chilvers from Rathbone commented on potential returns: “[This bond] offers both... measurable environmental impact and potentially attractive financial returns for our Ethical and Global Sustainability bond funds.”
Harrison Hill from RBC BlueBay discussed new opportunities: “[This debt structure] adds to a new and growing asset class of investment instruments...”
Matt Lawton from T Rowe Price appreciated its dual benefits: “[This transaction] offers a unique combination of attractive financial return potential alongside material and measurable positive impact.”
Anders Stensbøl Christiansen from Velliv mentioned local benefits: “[This investment will support native reforestation...] while providing an attractive return profile for our pension savers.”
The World Bank continues its mission since its inception in 1944 by providing loans and advisory services aimed at ending extreme poverty and promoting shared prosperity. For over seven decades, it has been issuing sustainable development bonds aligned with international guidelines.
For more information about these bonds or other inquiries:
Contact Heike Reichelt
Head of Investor Relations and Sustainable Finance
World Bank Treasury
debtsecurities@worldbank.org