The International Finance Corporation (IFC) plans to invest up to $100 million in an adaptation and resilience blue bond to be issued by Jordan’s Arab Bank, in a proposed transaction aimed at expanding private-sector financing for water security projects in one of the world’s most water-scarce countries.
The World Bank Group member’s proposed subscription will be through a private placement of up to $100 million, with potential mobilization of up to $50 million from third-party investors, according to project documents seen by DevFiNews.
The bond proceeds will be used to finance or refinance eligible water-related projects in Jordan, including water infrastructure, wastewater treatment plants, and projects to reduce non-revenue water losses.
The transaction is expected to be the first adaptation and resilience blue bond issuance in Jordan and among the first blue bonds in the region. IFC said the project would help create a benchmark for future blue and sustainability issuances in the country.
Jordan faces acute water scarcity, with renewable water availability estimated at around 60 to 100 cubic meters per person per year, far below the 500 cubic-meter threshold for absolute scarcity. Per-capita availability is projected to decline by a further 30% by 2040 because of climate change and population growth.
Water sector financing remains significantly below Jordan’s estimated needs of $30 billion to $35 billion under the National Water Strategy 2023-2040, despite donor-supported investments of about $1.5 billion to $2.5 billion under implementation or preparation.
Arab Bank, headquartered in Amman, is Jordan’s largest bank and has more than 600 branches across 27 countries. The lender plans to on-lend the proceeds of the proposed bond to eligible blue projects in Jordan only.
The project has been classified as FI-1 under IFC’s environmental and social sustainability policy, as proceeds may support water and infrastructure subprojects with potentially significant environmental and social risks and impacts.
IFC said Arab Bank will screen transactions against applicable environmental and social laws, the IFC Exclusion List and IFC Performance Standards. The bond will not support coal-related activities.
The proposed investment forms part of IFC’s efforts to help banks in Jordan use thematic debt capital market instruments to raise longer-term funding and expand sustainable, climate and blue finance offerings.
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