TMB Bank issues Thailand’s first green bond
More funding for private sector investments that address climate change
TMB Bank has issued the first green bond out of Thailand amounting to US$60 million with the International Finance Corporation (IFC) as the sole investor as the bank expands its green lending portfolio.
The pioneering green bond offering, announced on 7 June, will expand funding for private sector investments that help address climate change and will provide an alternative source of long-term green finance in the country. It will also help Thailand achieve its target of reducing greenhouse gas emissions by an unconditional 20% by 2030 relative to its business as usual scenario.
The funds will be used exclusively to finance climate-smart projects, particularly renewable energy. It is projected to support TMB's expansion in the green finance space, helping to address Thailand's climate financing gap of over US$31 billion per year until 2030.
TMB CEO Piti Tantakasem says the green bond reiterates the bank's commitment to further stimulate private investments in renewable energy and energy efficiency, which will ultimately benefit both the environment and the economy.
He points out that environmental sustainability is one of the pillars of TMB's sustainable banking framework and the bank has already financed many projects related to renewables, energy efficiency and waste reduction. He adds the bank aims to expand its green lending portfolio from US$280 million to US$470 million in the next five years with guidance and support from IFC.
In addition to the green bond, TMB will also issue a second bond, raising US$90 million from IFC, to support its lending programme to small and medium enterprises (SMEs), and increase access to finance for Thailand's SMEs, a key contributor to the country's economy.
The IFC regional industry head for Asia, financial institutions group, Vittorio di Bello, says the SME bond is likely to improve access to finance, which is a key constraint for Thai entrepreneurs, and help advance private sector solutions to SME finance.
The green bond and the SME bond will be the first seven-year bonds to be issued by a private bank in the market. The IFC and TMB first partnered in 2012 to jointly deliver financing to SMEs that were impacted by the destructive flood in 2011. This was followed by a risk-sharing facility in 2014 in which the IFC supported TMB's expansion in the SME market.
The TMB green bond is IFC's second green bond investment in the East Asia and Pacific region. It was also the sole investor when BDO Unibank issued the first green bond offering by a commercial bank in the Philippines in December 2017 amounting to US$150 million.