Facts for Prelims (FFP)
Source: FT
Context: The World Bank and Citi have collaborated to launch a $100 million bond aimed at addressing plastic waste.
What is a bond and PCB?
A bond is a financial instrument representing a loan made by an investor to a borrower, typically a government or corporation. In return, the borrower agrees to pay periodic interest and return the principal amount at maturity.
Plastic Credit Bond is designed to combat waste, and finance plastics collection and recycling projects in Ghana and Indonesia. Repayments are influenced by the sale of plastic and carbon offset credits. Investors receive their principal back at the end of the seven-year term, guaranteed by the World Bank, with a minimum interest payment of 1.75%.
This initiative signals further growth in the nascent carbon credit market. The plastics bond follows previous outcome bonds, including the “rhino bond” for wildlife conservation in Africa and an emissions reduction-linked bond for a water purification project in Vietnam.
