IFC anchors green bond for 5 GW of renewables in east Asia and Pacific

Share

The International Finance Corp (IFC) committed to an anchor investment of $75 million worth of green bonds issued by AC Energy Finance which secured the overall $300 million offering and spiked further interest from Filipino and overseas bank investors.

AC Energy plans to develop 5 GW of renewable energy project capacity in east Asia and the Pacific up to 2025. According to an IFC statement, the proceeds of the green bond issuance will help the company realize its plans, with IFC’s subscription dedicated to PV and wind projects in Vietnam.

“We are delighted to partner with a global player like IFC as we take a major step to grow our renewable energy investments,” said Eric Francia, AC Energy president and CEO. “IFC’s anchor investment and extensive experience in green bonds were key in successfully mobilizing substantial international and Philippine investment in AC Energy’s maiden capital offering.”

The commitment builds on IFC’s investment in the Vietnamese power sector, particularly its equity stake in the Gia Lai Electricity Joint Stock Company, developer of the first operational utility-scale PV projects in the country.

Bonds the way forward

Last month, AC Energy Inc – the energy branch of colonial era Philippines conglomerate Ayala Corporation – set the term for its dollar-denominated green bond at an aggregate principal amount of $225 million with a five-year tenure and a coupon offering 4.75% per annum. The bonds will be issued by subsidiary AC Energy Finance International Limited and guaranteed by AC Energy. The offering is a drawdown from a recently established $1 billion medium term note program and the bonds will be listed on the Singapore stock exchange.

Vietnam is on a path to reduce greenhouse gas emissions by a quarter by 2030, and 45% by 2050. To that end, the government wants the share of renewables in the country’s energy system to rise from 4% to 7% by next year, and 10% in 2030.

The authorities want a significant share of that capacity to be sourced from PV. The Asian Development Bank released a report in November which said, while those targets do not appear ambitious, the country experiences difficulty because of its underdeveloped financial system. To overcome that hurdle, the report’s authors suggested the establishment of a green financial policy framework and said green bonds and green credit programs were well-suited to mobilize more funds.

The IFC said World Bank Group member Vietnam has been active in the green bond market since 2010, with more than 133 such instruments issued, with a value of $8.8 billion.