AP Renewables Inc., a unit of Aboitiz Power Corp., signed a P12.5-billion loan agreement with Asian Development Bank, Bank of the Philippine Islands and Credit Guarantee & Investment Facility, a trust fund of the ADB.
“The proceeds of this undertaking will be used to finance the partial redemption of APRI’s redeemable preferred shares, and the partial funding of its operating expenditure and future rehabilitation requirements,” Aboitiz Power said in a disclosure.
BPI Capital Corp. acted as lead arranger and bookrunner, while BPI Asset Management and Trust Group served as the trustee and facility agent.
The issuance was certified as a climate bond in December 2015 by the Climate Bond Initiative and was the first issuance of its kind in Asia.
AP Renewables is one of the leading geothermal producers in the country. It operates two geothermal facilities, namely the 458-megawatt Tiwi geothermal power plant in Albay and the 289 MW Mak-Ban geothermal station in Sto. Tomas, Batangas.
AP Renewables acquired the Tiwi-Makban geothermal power plants from the government in May 2009.
“The successful use of credit enhancement for Tiwi-MakBan reflects our evolving strategy to make creative use of ADB’s expanding balance sheet to support infrastructure investment in Asia and the Pacific,” said Todd Freeland, director-general of ADB’s private sector operations department.
“Credit-enhanced project bonds offer an attractive alternative to bank financing, and by mobilizing cost-effective, long-term capital can help close the region’s infrastructure gap,” Freeland said.
ADB committed to double its financing for climate change adaptation and mitigation by 2020, including playing a catalytic role to crowd-in private sector climate finance.
“This is a landmark transaction for the Bank of the Philippine Islands, the Philippines and the Asia-Pacific region in terms of both capital markets development and climate finance,” said Reginaldo Cariaso, managing director of BPI Capital Corp., which acted as lead arranger and sole underwriter of the bond issuance.
“The transaction is highly innovative, representing the first project bond ever issued in local currency in the power sector in the Philippines and the first credit-enhanced project bond in Southeast Asia [excluding Malaysia] since the 1997-98 Asian financial crisis,” Cariaso said.
Aboitiz Power is a major power developer in the Philippines and an emerging leader in renewable energy in Southeast Asia. Since acquiring the Tiwi-MakBan complexes in 2009, Aboitiz Power has invested in the rehabilitation of the facilities to improve performance and extend their operating life. With the refurbishment complete, the project is now undertaking its first-ever debt financing.
“This transaction validates the successful rehabilitation program of the Tiwi-MakBan facilities,” said Liza Montelibano, first vice president and chief financial officer of AboitizPower.
“The deal opens a new avenue for financing and refinancing our various projects, allowing Aboitiz Power to redeploy capital toward our large pipeline of new power investments that include renewable energy. We are committed to support the energy needs of the country, and in building renewable energy resources through our brand Cleanergy,” Montelibano said.
Aboitiz Power’s Cleanergy portfolio is composed of 29 hydro and geothermal power generation facilities with a total of 915 megawatts attributable net sellable capacity.