BDO issues $150M green bond

Screengrab from www.bdo.com.ph

The country’s largest lender BDO Unibank has raised $150 million from a pioneering offshore “green” bond issuance, boosting private sector funding for climate change-mitigating initiatives.

This funding deal marks the first green bond issued by a commercial bank in the Philippines.

International Finance Corp. (IFC), the private sector investment arm of the World Bank, is the sole investor in the bond. This is also IFC’s first green bond investment in a financial institution in East Asia and the Pacific.

The funds will be used exclusively to finance climate-smart projects including renewable energy, green buildings, and energy-efficient equipment.

The pioneering green bond is seen to provide an alternative source of long-term green finance in the country and contribute to the Philippines’ target of reducing carbon emissions by 70 percent by 2030 relative to its “Business As Usual” (BAU) scenario.

“Climate change is a very real concern in the Philippines. It is one of the most vulnerable countries globally to the impacts of such change,” BDO president Nestor Tan said in a press statement on Friday. “This bond demonstrates our corporate commitment to come up with business solutions to address the challenges of sustainability.”

“This also aligns with our goal of growing BDO’s climate business, and ultimately, fostering the nascent climate finance market in the country. We are glad to partner with IFC, a global expert in green finance,” Tan added.

Vivek Pathak, IFC director for East Asia and the Pacific, said: The issuance is an example of BDO’s leadership in developing climate finance in the country. By building on our long-term partnership with BDO, we aim to create a vibrant green bond market in the country and stimulate private sector investment in renewable energy and energy efficiency.”

“Further, by setting the standard and the benchmark for green bonds issued in accordance with the Green Bond Principles which IFC helped develop, we hope to pave the way for other issuers and investors to access financing through this product, at a time when demand for green infrastructure and other sustainable investments are high,” Pathak said.

The financing deal is expected to help save 93,000 tons carbion dioxide emissions per year by 2022.

The issuance is an offshoot of an advisory engagement on sustainable energy finance between IFC and BDO that started in 2010. It helped establish sustainable energy finance as a core part of the bank’s sustainability strategy.

BDO has expanded its climate-smart portfolio from zero to over $500 million, making it a leader in local climate financing.

IFC is one of the world’s largest financiers of climate-smart projects for developing countries. Since 2005, IFC has invested $18.3 billion in long-term financing from its own account, and mobilized another $11 billion through partnerships with investors for climate-related projects. Overall, IFC has issued $7.25 billion in green bonds in 12 currencies. These issuances are part of a global strategy to develop the green bond asset class in emerging markets.