BPI Capital, ADB lend support to AboitizPower’s climate bond

MANILA, Philippines - BPI Capital Corp. has been tapped lead arranger and sole underwriter for the P10.7-billion (approximately $225 million) climate bond to be issued by AboitizPower.

The Asian Development Bank (ADB) will also extend a P1.8-billion loan to the project in the form of a guarantee of 75 percent of principal and interest on the bond. Renewables Inc., a subsidiary of AboitizPower Corp., for the Tiwi-MakBan geothermal energy facilities.

ADB private sector operations department director general Todd Freeland said the successful use of credit enhancement for Tiwi-MakBan reflects ADB’s expanding balance sheet to support infrastructure investment in Asia and the Pacific.

“Credit-enhanced project bonds offer an attractive alternative to bank financing, and by mobilizing cost-effective, long-term capital can help close the region’s infrastructure gap,” he said.

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.

Last year, 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.

BPI Capital managing director Reginaldo Cariaso said the deal represents a landmark transaction for the BPI, the Philippines, and the Asia-Pacific region in terms of both capital markets development and climate finance.

“The transaction is highly innovative, representing the first project bond ever issued in local currency in the power sector in the Philippines and the first credit-enhanced project bond in Southeast Asia (excluding Malaysia) since the 1997-98 Asian financial crisis,” he said.

AboitizPower is a major power developer in the Philippines and an emerging leader in renewable energy in Southeast Asia.

Since acquiring the Tiwi-MakBan complexes in 2009, AboitizPower has invested in the rehabilitation of the facilities to improve performance and extend their operating life. With the refurbishment complete, the project is now undertaking its first-ever debt financing.

“This transaction validates the successful rehabilitation program of the Tiwi-MakBan facilities,” Liza Montelibano, first vice president and chief financial officer of AboitizPower, said.

“The deal opens a new avenue for financing and refinancing our various projects, allowing AboitizPower to redeploy capital toward our large pipeline of new power investments that include renewable energy. We are committed to support the energy needs of the country, and in building renewable energy resources through our brand, Cleanergy.” Montelibano added.

AboitizPower’s Cleanergy portfolio is composed of 29 hydro and geothermal power generation facilities with a total of 915 megawatts attributable net sellable capacity.