$20B ADB power bonds investment

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The Asian Development Bank (ADB) has invested $20 million in the maiden climate bond issuance of AC Energy, a wholly-owned subsidiary of Ayala Corporation in the Philippines. This landmark public listing will be the first Climate Bond Initiative (CBI) certified US dollar climate bond in Southeast Asia listed on the Singapore Stock Exchange.

ADB is an anchor investor in the 10-year tranche, contributing to a total issue volume of $410 million. Proceeds of the bonds will finance renewable energy projects in the Asia and Pacific region, including Vietmam, the Philippines, and Indonesia. This climate bond will be used to support AC Energy’s plans to establish and expand a regional presence in the development of clean energy projects in accordance with environmental best practice.

“We believe that this green bond issuance offers investors a compelling alternative to traditional investments and will help promote financing of clean energy projects by the private sector across the region,” said AC Energy president and chief executive officer Eric Francia. “ADB’s support was invaluable to ensure that the bonds comply with CBI standards and we believe that this will demonstrate our commitment to meeting the highest environmental and safeguard standards.”

“This climate bond will help the Association of Southeast Asian Nations meet its target of drawing 23 percent of the region’s energy mix from modern, clean and sustainable renewable sources by 2025,” said director general of ADB’s Private Sector Operations Department Michael Barrow. “AC Energy aspires to be a regional leader in renewable energy, and ADB is delighted to support the Ayala Group in this effort by anchoring this investment and crowding in other institutional investors.”

AC Energy has over 1.8 gigawatts (GW) of attributable capacity (in operation and under construction) as of the end of 2018. The climate bond proceeds will contribute towards AC Energy’s target of 5 GW of attributable renewable energy capacity by 2025 across the region. In 2018, AC Energy generated 2,800 GW hours of attributable energy, 48 percent of which was drawn from renewable sources.

This is ADB’s third climate bond project and its first publicly listed climate bond. In December 2018, ADB invested 5 billion Thai baht in B. Grimm Power Public Company Limited’s maiden 5-year and 7-year climate bonds — the country’s first certified climate bond. In 2016, ADB also extended a guarantee to support an issuance for the Tiwi and Makban geothermal power projects in the Philippines — the first climate bond in Asia.

This investment is in line with ADB’s new Strategy 2030, which mandates that at least 75 percent of the number of ADB’s committed operations support climate change mitigation and adaptation by 2030, with climate finance from its own resources reaching $80 billion over 2019–2030.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 67 members — 48 of which are from the region.

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