I.F.C. issues ‘green’ bonds for renewable projects

By Cai U. Ordinario & Lenie Lectura- June 25, 2018

https://businessmirror.com.ph/i-f-c-issues-green-bonds-for-renewable-projects/

THE private-sector arm of the World Bank on Monday issued peso-denominated green bonds with an equivalent of approximately $90 million meant to support the local capital market and renewable energy (RE).

In a statement, International Finance Corp. (IFC) said proceeds would be used to finance the capital expenditure (capex) of Energy Development Corp. (EDC), which is focused on optimizing the generation output of its geothermal power plants and improving resiliency to climate impacts.

EDC officials said last month that the Lopez-led firm is setting aside P6.1 billion in capex this year.  The amount is around the same allocated a year ago. Bulk of the capex has been earmarked for geothermal drilling activities.

The first-ever “Mabuhay” bonds, as they are called, are part of IFC’s efforts to boost climate-smart investments in the Philippines.

 “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 said EDC is focused on optimizing the generation output of its geothermal power plants and improving resiliency to climate impacts.

Big player in renewables

EDC is the Philippines’s largest producer of geothermal energy and one of the world’s largest integrated geothermal energy producers. It has also expanded to other sources like wind, solar and hydropower. It has a total installed geothermal capacity of 1,457 megawatts (MW).

Its power generation in 2016 represents approximately 9 percent of the Philippines’s total power-generation capacity. EDC operates five geothermal plants in Leyte. These are the 112.5-MW Tongonan, the 125-MW Upper Mahiao, the 232.5-MW Malitbog and the 180-MW Mahanagdong power plants, and the 51-MW optimization plants.

In Negros Island, EDC operates two geothermal steam field projects and two geothermal plants under Bac-Man Geothermal Inc. These are the two units of Panlipinon geothermal facility (112.5 MW and 60 MW) and the 49.4-MW Nasulo geothermal plant.

EDC also operates one geothermal steamfield project in Mindanao, which delivers steam to two EDC-owned geothermal-power plants on Mount  Apo, which have capacities of 52 MW and 54 MW.

IFC’s commitment

“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 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.

IFC is one of the world’s largest financiers of climate-smart projects for developing countries. Its 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 $7.5 billion in 12 currencies. These issuances are part of a global strategy to develop the green bond asset class in emerging markets.