Bond will help finance a Philippine renewable power firm operating a geothermal plant south of Manila
MANILA, Mar 1 (Reuters) - The Asian Development Bank (ADB) has backed the issuance of Asia's first climate bond, providing credit enhancement to a Philippine renewable power firm operating a geothermal plant in south of Manila.
In 2015, ADB 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.
ADB said the 10.7-billion-peso ($225.61 million) bond was for AP Renewables Inc. (APRI), a subsidiary of AboitizPower Corporation for its Tiwi-Makban geothermal energy facilities.
"The successful use of credit enhancement for Tiwi-MakBan reflects our evolving strategy to make creative use of ADB's expanding balance sheet to support infrastructure investment in Asia and the Pacific," said Todd Freeland, Director General, ADB's private sector operations department.
"Credit-enhanced project bonds offer an attractive alternative to bank financing; mobilizing cost-effective and long-term capital can help close the region's infrastructure gap."
The local currency bond is in addition to a direct ADB loan of 1.8 billion peso ($37.7 million). The credit enhancement is in the form of a guarantee of 75 percent of principal and interest on the bond.
The Climate Bond, which has been certified by the Climate Bonds Initiative, is the first in Asia and the Pacific and the first ever Climate Bond for a single project in an emerging market.
AboitizPower is a power developer in the Philippines and a leader in renewable energy in Southeast Asia. ($1 = 47.4280 Philippine pesos) (Reporting By Manuel Mogato; Editing by Sherry Jacob-Phillips)
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