THE Asian Development Bank (ADB) has again accessed the green bond market as it raised another US$750 million to help finance climate change mitigation and adaptation projects.
Announced on September 20, the new 10-year bond was priced at 98.982% with a coupon of 3.125% to offer a yield of 16.90bp over the US treasuries.
“Our green bonds issued so far in 2018 have been diverse with transactions printed across currencies such as euros, Hong Kong dollars and Swedish krona while attracting new investors to our offerings,” says ADB treasurer Pierre Van Peteghem. “It is gratifying to see our green programme culminate with an extremely successful benchmark outing in US dollars and affirm our long-standing commitment to maintain a regular presence in the green bond market.”
The issue achieved a wide primary market distribution with 46% of the bonds distributed in Europe, Middle East and Africa, 28% in the Americas and 26% in Asia. By type of investors, 31% was bought by banks, 25% by insurance companies and pension funds, 24% by central banks and official institutions, and 20% by fund managers.
The transaction was lead-managed by Bank of America Merrill Lynch, Citi and HSBC.
Since the inaugural US dollar-denominated green issue in 2015, ADB has steadily expanded its green bond offerings, having pioneered the dual-tranche format for supranational green bonds in 2016 and issuing its maiden green Indian rupee-linked bond in 2017. In July this year, it printed its first euro-denominated green bond amounting to 600 million euro (US$705.88 million) for seven years.
ADB’s financing of climate mitigation and adaptation reached a record US$4.5 billion in 2017, a 21% increase from the previous year. ADB is now in position to achieve its US$6 billion annual climate financing target by 2020.
Of the total US$6 billion, US$4 billion will be dedicated to mitigation through scaling up support for renewable energy, energy efficiency, sustainable transport and building smart cities, while US$2 billion will be for adaptation through more resilient infrastructure, climate-smart agriculture and better preparation for climate-related disasters.
In July 2017, ADB adopted its climate change operational framework 2017–2030. The framework strengthens the bank’s support to its member countries in meeting their climate commitments under the Paris Agreement, the Sustainable Development Goals and the Sendai Framework for Disaster Risk Financing – including nationally determined contributions for reducing greenhouse gas emissions.
ADB plans to raise around US$23 billion from the capital markets in 2018.
