PH firm to issue first ‘green bonds’ in region

A SUBSIDIARY of publicly listed firm Aboitiz Power Corp. is raising up to P12.5 billion in funding for renewable energy (RE) investments with aid from the Asian Development Bank (ADB).

AP Renewables Inc. (APRI) signed on Monday an omnibus agreement with the ADB, Bank of the Philippine Islands and Credit Guarantee and Investment Facility (CGIF), a trust fund of ADB, to avail itself of their credit facilities of up to P12.5 billion.

The money will be raised two ways: A P10.7-billion ($225-million) local currency bond with so-called credit enhancement from ADB (in the form of a guarantee of 75 percent of principal and interest on the bond) and a P1.8-billion ($37.7-million) direct ADB loan.

The borrower, APRI, is the owner-operator of the 747-megawatt (MW) Tiwi-MakBan plants that were acquired from the government in 2009 and then rehabilitated. The complex is made up of the 289-MW Tiwi facility in Albay and the 458-MW MakBan plant straddling the provinces of Laguna and Batangas.

Essentially, the fund raising will refinance the loans used for the rehabilitation and free up cash for other RE investments such as AboitizPower’s 68-MW Manolo Fortich hydroelectric power project (under Hedcor Inc.) in Bukidnon, the 8.5-MW Maris Canal hydroelectric power plant project (a venture of SN Aboitiz Power and the National Irrigation Administration) in Isabela, which are both expected to go online by 2017. In addition, the funds will help finance AP’s ongoing energy exploration in the Philippines and in Asia.

Todd Freeland, director general of ADB’s private sector operations department, said the successful use of credit enhancement for Tiwi-MakBan reflected the bank’s evolving strategy to make creative use of its expanding balance sheet to support infrastructure investment in Asia and the Pacific. “Credit-enhanced project bonds offer an attractive alternative to bank financing, and mobilizing cost-effective, long-term capital can help close the region’s infrastructure gap,” he explained.

The Climate Bond, which has been certified by the Climate Bonds Initiative, is the first in Asia and the Pacific and the first ever for a single project in an emerging market. ADB has committed to double its financing for climate change adaptation and mitigation by 2020, including playing a catalytic role to crowd-in private sector climate finance.