Interest in green bonds among institutional investors has soared, with investments in World Bank green bonds now surpassing USD 1 billion.

The latest issue, a World Bank green bond denominated in Swedish Kronor (SEK), has attracted investors including the Swedish National Pension Fund AP3, WWF-Sweden, Church of Sweden, European private banks and life insurance companies.

The first World Bank green bond, also denominated in SEK, was launched in November 2008. Since then, additional bonds have been issued in USD and other currencies for investors in the US, Europe and Japan.

World Bank green bonds support projects in the World Bank's member countries that meet specific criteria for low carbon development. They offer an opportunity for institutional investors to support climate change solutions within their high-grade fixed income investment mandates.

Warren Evans, director of the environment department at the World Bank, commented: "We're pleased to see continued investor support to what the World Bank is carrying out in conjunction with our country partners; it's an indication that investors fully understand the inextricable link between development and climate change. Helping one clearly helps the other."

The transaction was lead managed by SEB. Klas Eklund, senior economist at SEB, added: "The World Bank green bond provides a good investment and a safe return, while offering investors the opportunity to actually help combat climate change."

Meanwhile, Nikko Asset Management announced this week it is to launch a World Bank Green Fund for European and Middle Eastern investors. The fund can invest up to 100% of its portfolio in green bonds issued by the World Bank.

The Luxembourg-domiciled UCITS III fund - which will be available in £, US$ and Euro share classes - will specifically target a range of international institutional investors, including financial groups, pension funds, banks, family offices and discretionary investment managers.

Charles Beazley, president of Nikko Asset Management Europe, said: "We are proud to be involved in a project of such social and environmental significance in partnership with the World Bank. Investors worldwide have long been frustrated in finding credible institutional-quality and transparent investment vehicles where they can be certain their money will directly help the environment without compromising their investment objectives.

"The key to this fund lies in its ability to offer investors both the security of a managed portfolio of bonds issued by the World Bank, and the comfort that an organisation with such stature and credibility as the World Bank is willing to ensure the investment supports environmental projects."

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