By Myrna M. Velasco
With the participation of the International Finance Corporation (IFC) and Asian Development Bank (ADB) as institutional investors, the energy development arm of the Ayala group opted to escalate its unrated green bond issuance to US$410 million.
In a briefing with reporters, AC Energy President and CEO Eric Francia indicated that the five-year issue with a coupon of 4.75% has been jacked up to US$300 million; while the company raised US$110 million from the 10-year issue with a coupon of 5.25%.
“IFC provided an anchor investment of US$75 million to complete the public placement of the company’s five-year green bond,” the company said.
ADB, for its part, has pitched in US$20 million investment in the 10-year bond facility, which the company also intends to list at the Singapore Exchange Limited-Securities Trading (SGX-ST).
“We initially issued US$225 million on January 22 and then we did a tap for additional US$75 million for the five years, so that five-year note went up to US$300 million with a 4.75% coupon,” Francia explained, adding that “the 10-year which was done on the same day as the tap of the five years was a smaller amount of US$110 million, with 5.25% coupon.”
He further noted that the bond issuance was not rated because of the very robust uptake of Philippine onshore investors.
“There was a lot of interest in the green nature, I think one of our learnings… it just so happens that there’s a strong demand from onshore Philippines, that there’s really other than banks – historically the corporates from Philippines do not feel, do not see the need for a rating because of that strong onshore demand,” Francia stressed.
While the tap facility was primarily buoyed by the entry of the multilateral investors, Francia asserted that more international investors could have joined had the bond issue been rated.
“We still got a good percentage of our investors from international – together with IFC and the international funds, we would now be at 40% of the $300 million — US$120 million of that $300 million is classified as international investors – I think it would have been more if we’re rated. A lot of the green bond investors could only invest also on rated bonds,” he expounded.
The AC Energy bond issue, according to IFC Director for East Asia and the Pacific Vivek Pathak, “demonstrates the excellent potential of the green bond asset class as a tool for mobilizing international institutional capital into infrastructure assets.”