China Banking Corporation issues green bond with IFC support
The US$150 million bond proceeds will be used to finance climate-smart projects, including renewable energy, green buildings, energy efficiency and water conservation
The first privately-owned commercial bank in the Philippines, China Banking Corporation, on October 19 announced the issuance of its first green bond amounting to US$150 million to fund a fresh wave of environmentally-beneficial projects to help mitigate climate change. For the second time for a Philippine bank green bond offering, the International Finance Corporation (IFC), a member of the World Bank Group, is the sole investor in the issuance.
The transaction supports the continuing development of the nascent green bond market in the Philippines and the government's target of reducing carbon emissions by 70% by 2030. "This bond affirms our long-term commitment to sustainability," says China Bank president William Whang in a statement.
The US$150 million bond proceeds will be used to finance climate-smart projects, including renewable energy, green buildings, energy efficiency and water conservation, in accordance with the Green Bond Principles. This green bond will bring China Bank's climate portfolio to over US$200 million, making it one of the market leaders for climate-smart financing in the country and one of a few banks that has established a clear sustainability strategy.
The Philippines' largest lender, BDO Unibank, announced in December 2017 the issuance of the country's first green bond also amounting to US$150 million to boost its financing for private sector investments that help to address climate change. IFC was likewise the sole investor in the bond – its first green bond investment in a financial institution in East Asia and the Pacific.
In August this year, IFC issued the so-called Mabuhay Bond, its first peso-denominated internationally-rated green bond, equivalent to about US$90 million to support the local capital market and renewable energy projects.
The 15-year bond was a groundbreaking offering as the first green bond denominated in Philippine peso to be issued by a multilateral development institution. IFC will use the proceeds of the bonds to fund the capital expenditure programme of Energy Development Corporation, which is focused on optimizing the generation output of its geothermal power plants and improving resiliency to climate impacts.
China Bank and IFC first worked together in 2012 on a sustainable energy finance advisory project. In 2017, China Bank participated in the mobilization of 796 billion pesos (US$14.78 billion) in loans, bonds and securities for projects and investments that contribute to the UN Sustainable Development Goals.
The number of projects supported by IFC's green bond programme has surged to 52 projects in financial year 2018, up from 32 projects in the previous year – an all-time high number and volume of green bond-financed projects. The portfolio is anticipated to reduce the greenhouse gas emissions annually by 6.3 million metric tonnes of carbon-dioxide equivalent – an increase from 2.2 million metric tonnes in financial year 2017.