Global law firm Clifford Chance advised HSBC as arranger of the largest ever outcome bond issued by the International Bank for Reconstruction and Development (“IBRD”), part of the World Bank Group. Interest on the bond is linked to carbon removal units (“CRUs”) issued by projects managed by Mombak, a Brazilian based company, and sold to Microsoft.
The CRUs will be generated by reforestation projects in the Amazon Biome. Approximately U.S.$36m will be mobilized by the transaction to be used by Mombak in its efforts reforesting land with native tree species.
The successful execution of the deal further adds to Clifford Chance’s established track record of advising clients on cutting edge ESG transactions, including previous carbon credit linked outcome bond transactions issued by IBRD.
Clifford Chance partner Deborah Zandstra, who led on the transaction, said: “We are delighted to have advised HSBC on this innovative reforestation linked transaction facilitated by the World Bank, showing the ability to mobilise private sector funding to finance projects generating carbon credits.”
Senior associate James Kelton emphasised: “It is great to see the continued expansion and development of IBRD’s outcome bond program and for Clifford Chance to continue to advise our bank clients on these exciting and groundbreaking structures.”
Deborah Zandstra and James Kelton led the team, and were assisted by associate Teninlanimi Owolabi and trainee Elle Jackson in the Debt Capital Markets Group in London. Partners Andrew Young and Gareth Old in New York also advised on the transaction, assisted by AndrĂ©s Berry and David Rondon. Partner Bruce Kahl, assisted by senior associate Andrew Whelan, advised HSBC’s agency team.
