ADB raises $500M for climate projects

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MANILA, PHILIPPINES: The Asian Development Bank (ADB) said it has raised $500 million from an inaugural green bond issue, aimed at channeling more investor funds to ADB projects that promote low-carbon and climate-resilient economic growth and development in developing Asia.

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“Asia is one of the world’s most vulnerable regions to climate change but at the same time is an increasing user of energy, water and other resources,” ADB Treasurer Pierre Van Peteghem said in a media statement issued by the bank. “ADB is committed to channeling critical finance to help Asia adapt and mitigate climate change which will support a prosperous and sustainable future for the region.”

Asia’s fast-growing cities, such as Manila in the Philippines, and others located on coastlines or low-lying areas, are at huge risk from climate change, the statement said. Lives and livelihoods in rural areas are also threatened by changing weather patterns, which can disrupt farming, cause floods or droughts, or slow hydropower output in mountainous regions.

The bank estimated the cost of adapting to climate change in Asia and the Pacific at $40 billion or more, annually, through 2050.

Developing Asia’s share of global energy-related carbon didioxide emissions has more than doubled to 37 percent as of 2010 from 17 percent in 1990, and is expected to increase further to about 47 percent by 2035.

The proceeds from ADB’s 10-year green bonds, lead-managed by BofA Merrill Lynch, Morgan Stanley, and SEB, will be used to finance climate change adaptation projects such as those which climate-proof water, energy, transport, or other urban infrastructure, the bank said. Climate change mitigation projects that could be financed by the bond include renewable energy, energy efficiency or sustainable transport initiatives like rail or bus services.

The bond was priced at 99.294 percent, with a spread of 12.45 basis points over the 2 percent US Treasury due Feb 15, 2025.  The coupon is 2.125 percent.

The bonds were sold to about 44 investors including AP2, AP3, AP4, Baloise Insurance, Bank Morgan Stanley AG, Banque Syz & Co SA, Blackrock, Calvert Investments, Donner & Reuschel Asset Management, Mirova, Nikko Asset Management Europe Ltd, Omega Global Investors on behalf of Local Government Super, Praxis Intermediate Income Fund, SEB Wealth, State Street Global Advisors, and TIAA-CREF.

By geography, 31 percent of the bonds were placed in Asia, 45 percent in Europe, Middle East and Africa, and 24 percent in the Americas.

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