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Geothermal energy
The bond will support AP Renewables Inc’s operation of its geothermal energy facilities, known as Tiwi-MakBan. In addition to its 75% guarantee, the ADB will provide a $37.7m loan to the company.
Reginaldo Cariaso, managing director of firm BPI Capital Corporation, which arranged and acted as sole underwriter of the bond issuance, said this represents a “landmark” transaction for the Bank of Philippines, the country as a whole, and the Asia-Pacific region in terms of both capital markets development and climate finance.
“The transaction is highly innovative, representing the first project bond ever issued in local currency in the Philippines’ power sector and the first credit-enhanced project bond in Southeast Asia, except Malaysia, since 1997/98 Asian financial crisis,” he highlighted.
Todd Freeland, director of the ADB’s Private Sector Operations Department, explained that credit-enhanced project bonds such as this one offer an attractive alternative to bank financing that can help close the region’s infrastructure gap by mobilising cost-effective, long-term capital.
Liza Montelibano, the first vice president and chief financial officer of AboitizPower, of which AP Renewables is a subsidiary, agreed the deal opens a “new avenue” for project finance. AboitizPower’s green power portfolio currently includes 29 hydro and geothermal power plants.
The ADB has committed to double its financing for climate change by 2020.
During a meeting over the weekend, G20 finance ministers agreed to explore the ways to finance the $90 trillion worth of investments required over the next 15 years to achieve the sustainable development goals and climate objectives.
The United Nations Environment Programme said that this will have to come mainly from private financial and capital markets.
“Financing the green transition is essential for sustained prosperity over the long term, and also to address the immediate concerns of finance ministers and central governors to promote growth, employment and sustainability,” explained Achim Steiner, executive UNEP director.
