The Asian Development Bank (ADB) has raised €600 million to help finance climate change mitigation and adaptation projects with the issue of a 7-year green bond.
“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,” said ADB Treasurer Mr. Pierre Van Peteghem. “We are very pleased to accommodate the strong demand for our green bonds from euro investors with last night’s offering, which allowed us to both tighten price guidance while increasing the issue size for our first euro denominated benchmark green bond.”
Proceeds of the green bond will support low-carbon and climate resilient projects funded through ADB’s ordinary capital resources and used in its non-concessional operations.
In July 2017, ADB adopted its Climate Change Operational Framework 2017–2030. The framework strengthens ADB’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’s financing of climate mitigation and adaptation reached a record $4.5 billion in 2017, a 21% increase from the previous year. ADB is now in position to achieve its $6 billion annual climate financing target by 2020. 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 7-year bond has an issue size of €600 million, a coupon rate of 0.35% per annum payable annually and a maturity date of 16 July 2025. It was priced at 99.924% to yield 43 basis points over the DBR 0.5% February 2025.
The transactions were lead-managed by Bank of America Merrill Lynch, Citi, and Credit Agricole CIB.
The issue achieved strong primary market distribution with nearly 90% placed in Europe, the Middle East, and Africa (EMEA); and 10% placed in Asia. By investor type, 39% of the bonds went to central banks and official institutions; 12% to banks; and 48% to fund managers, insurance, pension funds, and others.
ADB plans to raise around $23 billion from the capital markets in 2018.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. 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.