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IFC issues triple-A rated $90m green bond for optimizing work on geothermal plants by EDC, Philippines

Southern Negros geothermal plant, Negros Oriental, Philippines (source: Mike Gonzalez, creative commons BY-SA 3.0)
Alexander Richter 25 Jun 2018

The IFC has issued the first internationally rated triple-A peso-denominated green bond over an equivalent of $90 million for Energy Development Corporation (EDC) in the Philippines. The proceeds are to finance EDC’s capital expenditure program, which is focused on optimizing the generation output of its geothermal power plants and improving resiliency to climate impacts.

IFC, a member of the World Bank Group, has now issued the first internationally rated triple-A peso-denominated green bond — the equivalent of approximately $90 million with a 15-year maturity — to support the local capital market and renewable energy. The planned bond issuance was initially announced in May of this year.

The bond, called the Mabuhay Bond, sets a precedent as the first green bond — denominated in Philippine pesos — to be issued by a multilateral development institution.

“Addressing climate change is a priority for IFC,” said Jingdong Hua, IFC Vice President and Treasurer. “IFC’s Mabuhay bond showcases the powerful role that capital markets could play in mobilizing savings for climate finance. Adding pesos as a new green bond currency supports our goal to strengthen this important asset class.”

IFC is a triple-A rated issuer and has issued local currency bonds in over 30 countries to help build capital markets by attracting investors who want to put their money in low-risk investments.

“For the Philippines, the deepening of domestic capital market is critical for the long-term sustainability of the economy,” said Yuan Xu, IFC Country Manager for the Philippines. “The issuance of the Mabuhay bond evidences IFC’s commitment to support the country’s efforts to address climate change.”

IFC will use the proceeds of the bond to finance the Energy Development Corporation’s capital expenditure program, which is focused on optimizing the generation output of its geothermal power plants and improving resiliency to climate impacts. EDC is the Philippines’ largest producer of geothermal energy and one of the world’s largest integrated geothermal energy producers. EDC’s power generation in 2016 represents approximately 9 percent of the Philippines’ total power generation capacity.

IFC is one of the world’s largest financiers of climate-smart projects for developing countries. IFC’s green bonds support investments in renewable energy, energy efficiency, green buildings, and other areas that reduce greenhouse gas emissions. Since 2005, IFC has invested $18.3 billion in long-term financing from its own account, and mobilized another $11 billion through partnerships with investors for climate-related projects. To date, IFC has issued 109 green bonds amounting to a total volume of US $7.5 billion in 12 currencies. These issuances are part of a global strategy to develop the green bond asset class in emerging markets.

Source: IFC