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IFC backs Philippine geothermal giant with first peso-denominated green bonds

The country’s insurance companies and banks make ‘successful’ $90m issuance, which will finance Energy Development Corporation’s capex programme.

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Hot stuff: EDC is MIRA's big geothermal play

The International Finance Corporation has issued the Mabuhay Bond, the first green bond to be denominated in Philippine pesos and issued by a multilateral development bank, worth about $90 million.

The issuance has been “successful” with take-ups from domestic insurance companies and banks’ treasury books, an IFC spokeswoman told Infrastructure Investor. The bond, which has a 15-year maturity, is distributed to onshore qualified institutional buyers only, she explained, but declined to disclose further details regarding investors.

The proceeds from the issuance will be used to finance the capital expenditure programme of the Energy Development Corporation, the Philippines’ largest geothermal energy producer, which in 2016 accounted for approximately 9 percent of total power generated.

The company is also the largest, vertically integrated geothermal company in the world, with nearly 1.5GW of clean and renewable energy assets, according to Macquarie Infrastructure and Real Assets, which last October, in partnership with Singaporean wealth fund GIC, acquired a 31.7 percent stake in the company for $1.3 billion. Local family-owned power company First Gen is the majority shareholder.

The capex programme aims to optimise the generation output of EDC’s geothermal power plants and to improve resiliency, IFC said in a statement.

According to the bank’s spokeswoman, the green bond’s coupon rate stands at 6.3448 percent, higher than the Philippines’ 10-year government bond, which had a coupon rate this year of 6.25 percent.

“IFC’s Mabuhay bond showcases the powerful role that capital markets could play in mobilising savings for climate finance,” IFC vice-president and treasurer Jingdong Hua said in a statement. “Adding pesos as a new green bond currency supports our goal to strengthen this important asset class,” he added.

According to the statement, 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,” it said.