Government investing in new and innovative instrument from the IBRD
Published
Sweden is going to purchase hybrid bonds from the International Bank for Reconstruction and Development (IBRD) valued at approximately SEK 100 million. This investment is part of the Government’s strategy to modernise and streamline development assistance and promote sustainable economic development in partner countries.
“The Government’s USD 8.8 million investment in hybrid bonds is an important step in changing and modernising Sweden’s development assistance. These bonds provide a unique opportunity to strengthen the IBRD's capacity to finance transformational projects in areas such as climate. The revenues generated, known as the coupon rate, will simultaneously support vital efforts in Ukraine,” says Minister for International Development Cooperation and Foreign Trade Benjamin Dousa.
The IBRD is part of the World Bank Group. In conjunction with ongoing reform of the IBRD, the member countries have decided to strengthen its mandate to address the climate transition and other global challenges. Increased economic support from its member countries is required for the IBRD to carry out this task. This will be achieved by way of capital injections in the form of hybrid bonds issued by the IBRD.
Hybrid bonds combine the qualities of shares and bonds. They are also perpetual, which makes them an effective tool to strengthen the IBRD. This instrument allows for increased lending to projects that are crucial to address the climate transition and other global challenges. Thanks to this innovative financing model, every krona invested results in up to SEK 8 in increased lending.
By investing in hybrid bonds, Sweden is demonstrating its strong commitment to sustainable global development and its will to support the development of innovative financing solutions for development cooperation.
Press contact
Press Secretary to Minister for International Development Cooperation and Foreign Trade Benjamin Dousa
Phone (switchboard) +46 8 405 10 00
Mobile +46 76 133 67 90
email to Linn Laurin
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About bonds
Purchasing bonds means lending money to the issuer of the bonds. The purchaser of bonds usually receives revenue in the form of a coupon rate and repayment of the loan when it has reached maturity. The IBRD’s hybrid bonds are perpetual, but Sweden may convert them to paid-in capital to the IBRD (which entails a right to vote) in the event of a future capital increase.
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