MANILA, PHILIPPINES (20 September 2018) — The Asian Development Bank (ADB) has raised $750 million to help finance climate change mitigation and adaptation projects with an issue of a 10-year green bond.
“Our green bonds issued so far in 2018 have been incredibly diverse with transactions printed across currencies such as euros, Hong Kong dollars, and Swedish krona while attracting new investors to ADB’s offerings,” said ADB Treasurer Mr. Pierre Van Peteghem. “It is gratifying to see our green program culminate with an extremely successful benchmark outing in US dollars and affirm our longstanding commitment to maintain a regular presence in the green bond market.”
Proceeds of the green bonds will support low-carbon and climate-resilient projects funded through ADB’s ordinary capital resources and used in its non-concessional operations.
The 10-year bond has an issue size of $750 million, a coupon rate of 3.125% per annum payable semi-annually and a maturity date of 26 September 2028. It was priced at 98.982% to yield 16.9 basis points over the 2.875% US Treasury notes due August 2028.
The transaction was lead-managed by Bank of America Merrill Lynch, Citi, and HSBC.
The issue achieved a wide primary market distribution with 46% in Europe, Middle East, and Africa; 28% in the Americas; and 26% placed in Asia. By investor type, 31% of the bonds went to banks; 25% to insurance and pension funds; 24% to central banks and official institutions; and 20% to fund managers.
In 2015, ADB announced that it would double its annual climate financing to $6 billion by 2020. ADB’s support for climate change will rise to around 30% of its overall financing by the end of this decade. Out of the $6 billion, $4 billion will be dedicated to mitigation through scaling up support for renewable energy, energy efficiency, sustainable transport, and building smart cities, while $2 billion will be for adaptation through more resilient infrastructure, climate-smart agriculture, and better preparation for climate-related disasters.
The new Strategy 2030 also mandates that at least 75% of the number of ADB’s committed operations will be supporting climate change mitigation and adaptation by 2030 with climate finance from its own resources reaching $80 billion for the period 2019–2030.
ADB plans to raise around $23 billion from the capital markets in 2018.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 67 members—48 from the region. In 2017, ADB operations totaled $32.2 billion, including $11.9 billion in cofinancing.