Asian Development Bank Invests $20 Million in AC Energy’s First Climate Bond
The bonds will be listed on Singapore Stock Exchange
The Asian Development Bank (ADB ) has invested $20 million in the first climate bond issuance of AC Energy, a wholly-owned subsidiary of Ayala Corporation in the Philippines. This 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 Vietnam, 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 practices.
According Mercom Q4 2018 Funding and M&A report, AC Energy closed $83 million non-recourse financing for 80 MW of solar projects to be built in Dak Lak and Khanh Hoa provinces in Vietnam, from Indovina Bank of Vietnam and RCBC of Philippines.
“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. 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,” said AC Energy President and Chief Executive Officer Eric Francia.
“This climate bond will help the Association of Southeast Asian Nations meet its target of drawing 23% of the region’s energy mix from modern, clean, and sustainable renewable sources by 2025. 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,” said Director General of ADB’s Private Sector Operations Department Michael Barrow.
AC Energy had over 1.8 GW of power projects (in operation and under construction) at the end of 2018. The climate bond proceeds will contribute towards AC Energy’s target of 5 GW of renewable energy capacity by 2025 across the region. In 2018, AC Energy generated 2,800 GWh of energy, 48 percent of which was drawn from renewable sources.
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.
Prior to this, in December 2018, ADB invested 5 billion Thai baht ($155 million) in one of Thailand’s largest private power producers, B.Grimm Power through 5-year and 7-year green bonds.
In June 2018, ADB raised €600 million (~$702.80 million) to support climate change mitigation projects with the issue of a 7-year green bond. The previous year, ADB raised $47 million from a new issue of offshore Indian Rupee-linked bonds to finance climate change mitigation and adaptation projects in India.