News Risk Management27 Jun 2018

Philippines:First peso-denominated green bonds issued to support climate-smart investments and capital markets

27 Jun 2018

The IFC has issued the first internationally rated triple-A peso-denominated green bond - the equivalent of approximately $90m with a 15-year maturity - to support the Philippines' local capital market and renewable energy.

The bond, called the Mabuhay Bond, is the first green bond — denominated in Philippine pesos — to be issued by a multilateral development institution. The IFC is the World Bank entity which focuses on the private sector and creating markets in emerging economies and other difficult domains worldwide, often through public-private partnerships.

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

IFC 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.

“For the Philippines, the deepening of domestic capital market is critical for the long-term sustainability of the economy,” said IFC country manager for the Philippines Yuan Xu. “The issuance of the Mabuhay bond evidences IFC’s commitment to support the country’s efforts to address climate change.”

IFC will use the proceeds of the bond to finance the Energy Development Corporation’s capital expenditure programme, which is focused on optimising the generation output of its geothermal power plants and improving resiliency to climate impacts. EDC is the Philippines’ largest producer of geothermal energy and one of the world’s largest integrated geothermal energy producers, with its power generation in 2016 representing approximately 9% of the Philippines’ total power generation capacity.

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 $18.3bn in long-term financing from its own account, and mobilised another $11bn through partnerships with investors for climate-related projects. To date, IFC has issued 109 green bonds amounting to a total volume of $7.5bn in 12 currencies. These issuances are part of a global strategy to develop the green bond asset class in emerging markets.

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