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THE International Finance Corporation (IFC), a unit of the World Bank, issued its first South African rand-denominated green bond on Wednesday, raising about $71m for climate-friendly investments in emerging markets.

The nine-year R1bn paper was issued at a yield of 8.72% and marked the first time a green bond has been issued in SA by a multilateral institution.

"Green bonds are a powerful force for mobilising international and domestic savings for climate finance," said IFC vice-president and treasurer Jingdong Hua in a statement.

FirstRand Bank, one of SA’s largest banking groups, is the anchor investor and Rand Merchant Bank the sole manager for the transaction.

The IFC, founded in 1956, has previously issued similar bonds in Chinese and Indian currencies as part of efforts to build the asset class in developing markets. The World Bank unit said it expected its total green bond issuance to top $10bn by 2020 from about $4.5bn now.

Should next week’s climate meeting in Paris lead to a binding agreement, including establishing a global standard on carbon pricing to encourage private sector involvement, Mr Hua said demand for green financing will flourish.

"Solving global climate change requires trillions of dollars of investment. Only through the private sector, only through capital markets can the world raise this sort of money and green bonds are a critical element in crowding in that investment," he told Reuters.

He said that between July 2014 and June 2015, 38 projects received the IFC’s green-bond financing, with investments expected to reduce greenhouse emissions by the equivalent of 2.5-million-metric-tonnes of carbon dioxide a year. This is similar to taking 500,000 cars off the road, Mr Hua added.

Reuters