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ADB raises $1.25 B for climate plan

“ADB is res-ponding to the rapidly growing demand for green bonds with our second dual-tranche outing and our first five-year green bond offering,” said ADB treasurer Pierre Van Peteghem in a statement. File

MANILA, Philippines - Manila-based Asian Development Bank (ADB) has raised $1.25 billion from a dual tranche sale of five-year and 10-year green bonds, proceeds of which will be used to fund climate change projects across the Asia Pacific region.

The funds will be used to support low-carbon and climate resilient projects funded through ADB’s ordinary capital resources.

“ADB is res-ponding to the rapidly growing demand for green bonds with our second dual-tranche outing and our first five-year green bond offering,” said ADB treasurer Pierre Van Peteghem in a statement.

In 2015, the multilateral development bank announced it would double its annual climate financing to $6 billion by 2020, out of which $4 billion would be dedicated to mitigation through scaling up support for projects involving the use of renewable energy, energy efficiency, sustainable transport, and building smart cities. Around $2 billion, meanwhile, would be allotted for adaptation through more resilient infrastructure, climate-smart agriculture and better preparation for climate-related disasters.

The five-year bond has an issue size of $750 million, a coupon rate of 1.875 percent per annum, payable semi-annually and will mature on Aug. 10 2022. The 10-year bond has an issue size of $500 million, a coupon rate of 2.375 percent per annum, payable semi-annually and a maturity date of Aug. 10, 2027.

ADB said both issues achieved wide primary market distribution, with 24 percent of the five-year bonds placed in Asia; 29 percent in Europe, Middle East and Africa; and 47 percent in the Americas. By investor type, 38 percent of the bonds went to central banks and official institutions; 31 percent to banks; and 31 percent to fund managers.

For the 10-year bonds, 13 percent were placed in Asia; 69 percent in Europe, Middle East and Africa; and 18 percent in the Americas. By investor type, 25 percent of the bonds went to central banks and official institutions; 52 percent to banks; and 23 percent to fund managers.

ADB plans to raise around $30 billion from the capital markets this year.

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