Jan 22, 2024
COP28 turbocharged momentum for the CIF Capital Markets Mechanism (CCMM), an innovative financial instrument to attract private sector capital by issuing debt in the form of bonds and accelerating availability of climate funding by frontloading reflows from CIF’s Clean Technology Fund (CTF).
CIF, the World Bank as Treasury Manager and Trustee, and CTF’s six multilateral development banks (MDBs) implementing entities have collaborated closely to design and structure CCMM, with significant progress made over the past two years. BofA Securities, BNP Paribas, HSBC, and TD Securities have been appointed as lead managers for the eventual inaugural bond, planned to be launched in 2024. Clifford Chance LLP provides ongoing support as external legal counsel for CCMM.
“We must be bold and innovative to end poverty and preserve a livable planet for all. The Capital Markets Mechanism will be a powerful instrument for multilateral development banks, including the World Bank, to channel climate finance to those who need it most – to the people and communities in developing countries that are on the frontlines of climate change,” said World Bank Senior Managing Director Axel van Trotsenburg during the CIF Scaling Up Just Energy Transitions To Enable Industry Decarbonization event. “CIF is a good example of multilateral development bank (MDB) cooperation. When the MDBs work together, we can deliver truly transformational results.”
CCMM bond proceeds will be channeled to the CTF Trust Fund and deployed as concessional finance to provide much needed resources to developing countries. CTF will be the first pure play capital market issuer in the MDB space that finances projects to apply low carbon technologies that can significantly mitigate greenhouse gas emissions. For the first time, it will enable fund-raising for multiple multilateral development banks from private capital markets through a single platform.
“We are excited by progress on opening the CIF Capital Market Mechanism to investors by 2024,” said Luis Tineo, CIF’s Interim CEO. “CCMM will allow CIF’s CTF to commit $500m a year for ten years to support clean technology projects in low- and middle-income countries. This is a game changer.”
