- IFC and Amundi successfully close world’s largest green bond fund
IFC and Amundi successfully close world’s largest green bond fund
Friday 16 March 2018
IFC and Amundi announced the successful launch of the world’s largest targeted green bond fund focused on emerging markets, the Amundi Planet Emerging Green One (EGO).
IFC, a member of the World Bank Group, and Amundi, Europe’s largest asset manager, today announced the successful launch of the world’s largest targeted green bond fund focused on emerging markets, the Amundi Planet Emerging Green One (EGO). The fund, which closed at $1.42 billion, is expected to deploy $2 billion into emerging markets green bonds over its lifetime, as proceeds are reinvested during 7 years. With a $256 million cornerstone commitment from IFC, the fund aims to increase the capacity of emerging market banks to fund climate-smart investments.
This landmark transaction with IFC contributes to Amundi’s innovative and leading role in the climate finance space. Leveraging on Amundi’s emerging market debt investment capabilities, our commitment to ESG, and IFC’s unique outreach in emerging countries, Amundi Planet is a one-of-a-kind example of the potential that public private partnerships can bring to investors and to the society.
Yves PERRIER, Directeur Général d'Amundi
The formation of the Amundi Planet EGO marks the end of a successful fundraising campaign, bringing together a large diversified network of institutional investors across Europe and the Middle East. The long timescale and large size of the fund, which will actively invest in emerging market green bonds issued by financial institutions through to 2025, is expected to significantly increase the scale and pace of climate finance in emerging markets by crowding in capital from investors and creating new markets. The fund is listed on the Luxembourg Stock Exchange.
The global market for green bonds has expanded rapidly in recent years—totaling more than $155 billion in 2017, but few banks in developing countries have issued such bonds. IFC and Amundi expect this new fund to encourage more local financial institutions to issue green bonds, by increasing global demand and building local markets.
Philippe Le Houérou, IFC CEO
The fund’s positive reception demonstrates the increasing appetite for climate investment. This transaction illustrates both IFC’s commitment to increase its climate investments to 28% from its own account, and mobilize an additional $13 billion a year in private financing by 2020, as well as Amundi’s commitment to sustainable finance and leadership in offering attractive green investment solutions to investors across all asset classes.
Investing in social bonds: factors and benefits
Over the past years, the global investor community continued to integrate risks related to climate change into investment decision making. Such a level of mobilization has yet to materialize for the consideration of social risk.
Bond back to Core: where is the value in the current economic cycle?
“Slowdown in global growth with subdued inflation and dovish Central Banks (CB) committed to avoid further economic deceleration are trends that should remain favourable for bond investors.” begins Eric Brard, Head of Fixed Income at Amundi. “On one side, investors should limit the upside in core bond yields and, on the other, support the credit market, despite the strong spread compression in this first part of the year. An increasingly selective approach will be crucial.”
Bridging the gap between quantitative and fundamental approaches
Bonds market faced low rates since many years. And they probably won’t rise up soon.Clients’ needs for diversification and current market conditions (in addition to low rates, i.e. increase of bonds issuers) drove the path towards new solutions engineering. “Listening to our clients, observing the market and experiencing our econometric models were keys when building this new range” says Jean-Marie Dumas, Head of Fixed Income solutions at Amundi. “High yield laid behind us. We had to provide a serious alternative to traditional judgmental fixed income strategies” he adds.