The World Bank (International Bank for Reconstruction and Development, IBRD has priced its latest outcome bond, a US$200 million Clean Cooking Outcome Bond maturing on 31st March 2032.
The bond aims to make cleaner cooking accessible to more than one million people in Ghana.
Under the terms of the bond, an amount equivalent to some of the coupon payable to investors will be frontloaded and paid instead to support projects distributing over 400,000 cleaner cookstoves in Ghana. The bond coupon includes a fixed rate component and a variable component that is linked to the sale of carbon credits generated from the use of the cookstoves. Proceeds from the US$200 million bond will support World Bank–financed sustainable development projects.
“This transaction shows how investors can align financial returns with tangible development outcomes – expanding access to cleaner cooking solutions in Ghana. Strong investor uptake reflects a growing appetite for outcome bonds and the potential to use this kind of financial structure to address pressing development challenges,” said Anshula Kant, Managing Director and World Bank Group Chief Financial Officer.
Through the transaction, approximately US$30.5 million of private capital is mobilised to support the projects, which are designed and implemented by East Africa-based company UpEnergy. The projects are expected to make cleaner cooking accessible to 1.3 million people, cutting reliance on biomass, which will significantly reduce greenhouse gas emissions.
The initiative reduces household air pollution, improves health outcomes, and helps to create local jobs through the manufacturing and distribution of improved cookstoves and the distribution of electric cookstoves.
Standard Chartered is sole Lead Manager and Bookrunner for the transaction.
“We’re proud to partner with the World Bank and UpEnergy to deliver the first Clean Cooking Outcome Bond. The bond underscores the power of our global network, which we have brought to bear alongside our capital markets, structuring, carbon and commodities markets expertise to deliver long-term value in Ghana, through the delivery of health, social and environmental outcomes. The US$200 million size for the outcome bond and diverse investor base from four different regions across our footprint is testament to the success of this innovative transaction,” said Henrik Raber, Global Head, Global Banking at Standard Chartered.
The bond is 100% principal protected with the USD 200 million proceeds supporting the World Bank’s sustainable development activities globally. Investors in the bond will forego a portion of the ordinary fixed coupon payments, with an equivalent amount redirected, through a hedge transaction with Standard Chartered, to provide upfront financing for clean cooking projects in Ghana, delivered by UpEnergy.
The projects have been authorised by the Governments of Ghana and Switzerland and will generate carbon credits in the form of Internationally Transferred Mitigation Outcomes (ITMOs). ITMOs are units representing verified greenhouse gas emission reductions that can be transferred internationally between countries or jurisdictions under Article 6 of the Paris Agreement.
The KliK Foundation in Switzerland has committed to purchase these carbon credits under an offtake agreement. A portion of the carbon monetization revenue will be paid to bondholders as the variable coupon component, in addition to the fixed minimum rate component from the World Bank. This is the first financing to connect cash flows on a bond to the generation of ITMOs, introducing a new model for channeling private capital into smart development solutions.
“We are pleased to participate in this innovative transaction given its attractive relative valuation, strong verification process and comprehensive impact reporting alongside industry leading partners. We are especially excited to support the operationalization of Article 6.2 of the Paris Agreement by investing in a transaction that will create high-quality Internationally Transferred Mitigation Outcomes (ITMOs), helping Ghana and Switzerland collaborate to meet their Nationally Determined Contributions (NDCs) under the accord,” said Stephen M. Liberatore, CFA Head of ESG/Impact, Global Fixed Income, Nuveen.
“By being part of this transaction, we deploy capital where it makes most impact. We are actively supporting innovative projects that have real environmental and social outcomes. Financial performance and responsibility go hand in hand, creating value that extends beyond traditional returns,” said Alexander Onica, Head of Fixed Income and FX, Skandia.
“Mackenzie Investments is proud to partner with the World Bank on the Clean Cooking Outcome Bond. This innovative transaction, which helps fund the mass distribution of electric and improved charcoal cookstoves in Ghana, helps reduce emissions and represents a meaningful step forward in scaling the global adoption of Internationally Transferred Mitigation Outcomes (ITMOs) under Article 6 of the Paris Agreement. By directly linking investor capital to measurable climate outcomes, the bond advances multiple sustainable development goals while delivering a compelling risk-adjusted return profile. Mackenzie is confident that the bond’s combined environmental and investment attributes will generate strong value for both society and our clients,” said Hadiza Djataou, Vice President & Portfolio Manager, Fixed Income, Mackenzie Investments.
“Velliv is very pleased to support another impact investment through the World Bank’s innovative outcome bond structure. The World Bank Clean Cooking Outcome Bond will provide cleaner and more fuel-efficient cookstoves for the local population of Ghana in order to support the country’s energy transition and displace polluting and inefficient cooking practices. In addition, the bond will provide an attractive risk-adjusted return for our pension savers,” said Lea Vaisalo, Chief Investment Officer, Velliv Pension.
“This marks L&G’s first outcome bond investment, and we’re proud to partner with the World Bank and Standard Chartered to support an important cause. Harmful cooking practices impact health, the environment, and livelihoods, yet the Clean Cooking Alliance estimates a USD 8 billion funding gap to achieve universal access to clean cooking by 2030. Through our Nature & Social Outcomes strategy, we invest on behalf of our Defined Contribution members, demonstrating how pension capital can deliver measurable social impact while generating positive returns for retirement members,”said Jake Harper, Senior Investment Manager, Asset Management, Legal & General.
“The Rathbone Ethical Bond and Rathbone Greenbank Global Sustainable Bond funds are pleased to support the World Bank on another outcome bond. The new innovative structure offers principal protection from the World Bank, and at the same time provides funding to clean cooking projects in Ghana through the frontloaded portion of the coupon, generating carbon credits, Rathbones continue to support bond structures that are ways of dealing with the Anthropocene,” said Bryn Jones, Head of Fixed Income, Rathbones Asset Management.
“Our investment in the World Bank Clean Cooking Outcome Bond is another tangible example of how the fixed income markets are evolving and facilitating opportunities to direct capital to impactful initiatives. In this case improving the everyday lives for many people in Ghana; funding programs specifically targeted at replacing polluting stoves and fuels with modern, cleaner cooking solutions at scale. For us, this is a natural evolution of the ‘outcome bond’ structures we have historically invested in, such as biodiversity and reforestation – retaining principal protection and a clear risk/return profile, while explicitly linking part of the economic value to real‑world development outcomes,” said Harrison Hill, Impact-Aligned Bond Strategy Portfolio Manager, RBC BlueBay Asset Management.
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