Mombak HSBC ARR Carbon outcome bond

Terms

Announced

13 Aug 2024

Instrument

Debt · Outcome bondA bond whose return is linked to the credits the project delivers.

Amount

US$36.0mReported as US$36m distributed

Source

worldbank.org

Parties

Project developer

Mombak

Country

Brazil

Capital providers

Capital providers and the amount counted for each

Party	Role	Amount	Basis
Velliv	Bond investor	US$3.60m	Estimated: an even share, 1 of 10
Nuveen	Bond investor	US$3.60m	Estimated: an even share, 1 of 10
Mackenzie Investments	Bond investor	US$3.60m	Estimated: an even share, 1 of 10
T. Rowe Price	Bond investor	US$3.60m	Estimated: an even share, 1 of 10
Rathbones	Bond investor	US$3.60m	Estimated: an even share, 1 of 10
AP2	Bond investor	US$3.60m	Estimated: an even share, 1 of 10
Azimut Holding	Bond investor	US$3.60m	Estimated: an even share, 1 of 10
Impax Asset Management	Bond investor	US$3.60m	Estimated: an even share, 1 of 10
Muzinich & Co	Bond investor	US$3.60m	Estimated: an even share, 1 of 10
RBC BlueBay Asset Management	Bond investor	US$3.60m	Estimated: an even share, 1 of 10

Arranged by

Arrangers and what each arranged

Party	Role	Arranged	Basis
HSBC	Arranger	US$36.0m	Sole arranger: the whole transaction

Carbon

Pathway

ARR (afforestation, reforestation, revegetation)

Project type as recorded

Afforestation / reforestation

Backed by offtakes from

• Microsoft
• Symbiosis Coalition

· signed before this financing

What happened

World Bank Outcome bond with HSBC (see Kumo's piece on outcome bond structures for more information) US$36m distributed from World Bank US$226m 6 year bond - linked to Microsoft offtake. -Funding was mobilised to Mombak's Amazon reforestation projects

Kumo note

Outcome bond issued by the World Bank, with investors foregoing coupon payments to direct capital to the Mombak projects (first for ARR). HSBC was the arranger of the bond but not the issuer. The second to be done solely backed by a carbon credit offtake. Multiple pension and insurance fund investors. Nuveen was the largest investor though amounts were undisclosed.

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