In January 2024, the World Bank issued
the $100 million Plastic Waste ReductionLinked Bond. The bond raised $14 million
to finance two plastic waste collection
and recycling projects in Indonesia andGhana, providing investors with a return
linked to plastic and carbon credits
generated by the projects.
In addition to collecting approximately 230,000 tons ofplastic waste, out of which 180,000 tons will be recycled, thisinitiative will help abate over 100,000 tons of CO2e emissions
over the next ten years. Moreover, it is anticipated that theproject will, improve health and sanitation in local
communities, protect marine life by preventing plastic wastefrom leaking into the ocean, and provide employment
opportunities for women microentrepreneurs to build theirown plastic waste collection businesses.

Background
Every year, between 19 and 23 million tons of plastic waste
leaks into aquatic ecosystems, polluting lakes, rivers, andseas. According to UNEP, plastic pollution can alter habitats
and natural processes and reduce ecosystems’ ability toadapt to climate change, thus directly affect millions ofpeople’s lives, food security, and social well-being.
The World Bank Treasury has been exploring innovative
ways to raise private capital to tackle global development
problems such as plastic pollution. Developers of projects
that address excess plastic waste often face challenges inraising the necessary financing required to implement theirinitiatives. This outcome bond solves the timing mismatch
between the costs incurred by project developers and thefuture revenues from the sale of plastic and carbon credits.

Transaction Objectives
The transaction aims to raise $14 million for two projects thattackle plastic pollution by securitizing expected future plasticand carbon credits generated by the projects.
The transaction mobilizes international bond investors toboth fund the projects and to share in the development
outcome risks. This innovative structure allows high grade
fixed income investors to take exposure to projects that fightplastic pollution and support the development of a plasticcredit market.

1Polyethylene Terephthalate

Source: SEArcular by GREENCORE Project

Projects
The two projects were selected by Plastic Collective, a privatecompany founded to address mismanaged plastic waste, whomanages the project’s plastic and carbon credit programs.

ASASE Foundation, Accra (Ghana)
The ASASE project starts small recycling plants as social
enterprises in vulnerable communities across Ghana whereplastic pollution is most severe. It empowers women
entrepreneurs to build their own plastic waste collection
businesses as a sustainable source of income andemployment. Funding from the bond will be used to financethe expansion of plastic collection and recycling sites
operated by the ASASE foundation to increase theirprocessing capacity.

SEArcular, Surabaya (Indonesia)
The SEArcular project is a plastic waste collection andrecycling project that empowers coastal communities by
providing training, employment and price premiums for theocean bound plastic they collect. The project focuses onproviding an appropriate end of life for the more difficult torecycle plastic types. Financing from the bond will be used toinstall a food grade PET1 recycling production line in
Surabaya Indonesia.

Financial Solution

Outcome

The World Bank issued a seven-year $100 million, principal
protected Plastic Waste Reduction-Linked Bond with 100%of the proceeds used to finance the World Bank’s
sustainable development projects and activities globally.
Bond investors forego a portion of ordinary World Bank
coupon payments, which are instead front-loaded andchanneled to the two projects through a hedge transaction
with Citi. In return, bond investors will receive annual
coupons composed of amounts linked to a portion of theplastic and carbon credits generated by the projects plus asmaller than ordinary World Bank fixed rate amount. In
addition to the return of principal at maturity, investors may
receive an outperformance payment linked to the achieved
plastic credit sales prices.

This transaction mobilized much-needed up-front capital forthe two projects and in addition has the potential to promote
the growth of carbon and plastic markets.

In return for receiving approximately $14 million up-front
financing (from bond investors foregone coupons), Plastic
Collective commits to pay Citi a fixed price per plastic credit
issued by the projects (based on an agreed number ofplastic credits) and to deliver to Citi a portion of the carbon
credits issued by the projects. Citi commits to pay the WorldBank the plastic credit linked amount received from Plastic
Collective plus a fixed price per carbon credit received from
Plastic Collective. The maximum potential plastic andcarbon credit linked interest amount for investors isapproximately $20 million. In addition, at bond maturity,
Plastic Collective commits to make a plastic credit sales
price outperformance payment for the benefit of bondinvestors. The outperformance payment is based on thedifference between the average sales price of plastic credits
sold by Plastic Collective and the agreed fixed price perplastic credit paid by Plastic Collective.

The bond was issued at par and provides investors with aminimum guaranteed return of 1.75% (the fixed rate). It
offers potential yield enhancement compared to regularWorld Bank bonds of similar maturity if the projects andsales of plastic and carbon credits by Plastic Collective
perform as expected.

Key Terms
Size / Maturity

USD 100 million / 7-year

Issue Price

100%

Specified
Denomination
Redemption
AmountUSD 100,000

Issue Date

Redemption at Par + Additional
Redemption Amount (OutperformancePayment) based on the average price ofthe plastic credits sold by PlasticCollective.
January 31, 2024

Maturity Date

January 31, 2031

Plastic Creditlinked
Interest

Linked to the number of plastic credits
from the projects, subject to a cap of$19,468.25 per specified denomination

VCU Linked
Interest

Linked to the number of carbon credits
from the projects, subject to a cap of$532.99 per specified denomination

Transaction Structure

Contact: Michael Bennett, Head of Market Solutions and Structured, The World Bank Treasury
 mbennett1@worldbank.org

 +1 (202) 458 5099

1225 Connecticut Avenue NW, Washington, D.C., 20433, U.S.A.