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Joint press release: EU and partners sign the Global Green Bond Initiative Fund to mobilise up to €20 billion in investments for sustainable infrastructure
The European Union and partner development finance institutions have signed the Global Green Bond Initiative (GGBI) Fund, a new public-private investment tool to mobilise up to €20 billion of private capital for sustainable infrastructure projects in low and middle-income countries.
The GGBI Fund is one of the three pillars of the Global Green Bond Initiative, a flagship of the European Union's Global Gateway strategy. It aims to unlock up to €3 billion in green bonds in partner countries and help finance activities that support climate and environmental goals. The fund will invest exclusively in bonds issued in primary markets, prioritising first-time issuers like governments, local authorities and businesses. At least 20% of investments will target the world's least developed countries, with support for bonds in both local currency and euro. This will help strengthen local capital markets and promote the international use of the euro. As a leading worldwide green bond issuer, the EU will promote high environmental standards and share best practices with partner countries.
The GGBI Fund is expected to crowd in up to €2 billion from European and international private investors, leveraging approximately €1 billion in equity from public investors. Of this, close to €800 million will come from a consortium of European development finance institutions led by the European Investment Bank, alongside the European Bank for Reconstruction and Development, and development banks from Spain, Italy, the Netherlands, Germany and France. The European Commission will provide credit protection to the consortium through its European Fund for Sustainable Development Plus (EFSD+) Guarantee. This amount will be complemented by equity contributions from the Government of the Grand Duchy of Luxembourg, implemented via LuxDev, and later on with additional funding expected from the Green Climate Fund upon finalisation of the documentation process later this year. The fund will be managed by Amundi, the largest European asset manager.
Background
The Global Green Bond Initiative
The Global Green Bond Initiative is a flagship initiative of the Global Gateway strategy that aims to mobilise up to €20 billion of private capital for large-scale sustainable infrastructure projects while fostering strong green bond markets in partner countries. It has three complementary pillars:
- The GGBI Fund which mobilises private capital at scale towards sustainable investments in developing countries through green bonds;
- A comprehensive Technical Assistance programme which will share EU expertise and support issuers in partner countries in designing and issuing both green bonds and projects; and
- The Green Coupon Subsidy Facility which will help reduce borrowing costs for issuers facing particularly prohibitive interest rates, under specific circumstances. More specifically, with this Green Coupon Facility, the EU will then subsidise part of the coupons for green bond issuers who face very high interest rates. This will allow partner countries to grow on the green bond market much faster and raise the money they need for their people and their economy.
The GGBI Consortium
The GGBI consortium is led by the European Investment Bank and consists of the Spanish Agency for International Development Cooperation (AECID), the Italian Development Bank Cassa Depositi e Prestiti (CDP), the European Bank for Reconstruction and Development, the Dutch Entrepreneurial Development Bank FMO, the German Development Bank KfW, and the French DFI Proparco.
Global Gateway
Global Gateway is the EU's strategy to boost smart, clean and secure links in digital, energy and transport, and to strengthen health, education and research systems worldwide.
It delivers high quality investments that meet the highest environmental, social and governance standards, ensuring sustainability and transparency for partners, people and the planet.
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