Use-of-proceeds bond
Use-of-proceeds bond is a debt instrument whose net proceeds are earmarked for eligible projects or assets defined in the financing framework. Applying Use-of-proceeds bond requires a stated reporting boundary, decision user, financial instrument, materiality lens, and governance responsibility. Those choices determine how Use-of-proceeds bond can be compared or acted upon.
In simple terms
In practical use, Use-of-proceeds bond is a debt instrument whose net proceeds are earmarked for eligible projects or assets defined in the financing framework. For Use-of-proceeds bond, its rules, eligibility conditions, incentives, prices, or financial terms must be tied to the covered activity within a declared reporting boundary, decision user, financial instrument, materiality lens, and governance responsibility. Use-of-proceeds bond connects with Green bond and Impact investing; each can affect its application without sharing its definition. The candidate link between Use-of-proceeds bond and Biodiversity finance remains a separate expansion question supported here by International Capital Market Association.
Why it matters
Use-of-proceeds bond matters because decisions about it determine what enters a disclosure or transaction, which decision user it serves, and who is accountable for supporting evidence. A defensible use of Use-of-proceeds bond therefore exposes its boundary, method, evidence, responsible actor, and uncertainty before a conclusion is accepted. That discipline keeps Green bond and Impact investing from being treated as proof of Use-of-proceeds bond when their criteria, scope, or results differ.
Example
A reporting and finance team evaluates Use-of-proceeds bond for a defined decision and records the relevant reporting boundary, decision user, financial instrument, materiality lens, and governance responsibility. For Use-of-proceeds bond, the team uses cited material from International Capital Market Association to apply the instrument to the eligible activity or transaction, documenting the period, data, assumptions, and comparison with Green bond. It treats Impact investing and Biodiversity finance as separate questions rather than proxies for Use-of-proceeds bond.
How it differs
Green bond
A Use-of-proceeds bond earmarks proceeds for eligible projects, whereas a Green bond is the environmental subset whose eligible uses are green projects. Other use-of-proceeds bonds can finance social or mixed sustainability purposes.
References
Current status
- As of
- Issuer
- International Capital Market Association
- Instrument or version
- Green Bond Principles
- Status
- This entry reflects the cited authoritative sources on the stated date. Check the issuer for later amendments, replacements, or implementation guidance.
Applicability: Applicability depends on the instrument's stated scope, edition, jurisdiction, eligibility rules, and implementation requirements; this dictionary entry does not determine whether a particular organization, activity, or transaction is covered.