Milbank in first US-backed climate bond issue in SE Asia

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Milbank Tweed Hadley & McCloy represented Bank of America Merrill Lynch, HSBC and CLSA as joint arrangers and dealers in connection with the establishment of a US$1 billion medium-term note (MTN) programme issued by Cayman Island-based Energy Finance International and guaranteed by Philippines-based AC Energy, and the issuance of two series of notes totaling US$410 million.

This inaugural climate bond issuance by AC Energy marks the first climate bonds initiative (CBI) certified US-dollar climate bond in Southeast Asia to be listed on the Singapore Stock Exchange.

The notes are a drawdown from the MTN and comprise: (1) an initial issuance of US$225 million 4.75% notes due in 2024, and the issuance of an additional tranche of US$75 million in 2024 Notes; and (2) a second series issuance of US$110 million 5.25% notes due in 2029.

The net proceeds of the notes issued will be used for AC Energy’s green projects in accordance with its green bond framework. Under the terms of the transaction, the proceeds of the bonds will finance renewable energy projects in Vietnam, the Philippines, Indonesia, and others within the Asia-Pacific region.

Under the terms of the CBI certification, AC Energy must use the funds for assets and projects that have low carbon impact and further climate resiliency within the economy. AC Energy is the energy subsidiary of Ayala Corporation, one of the oldest and largest conglomerates in the Philippines with interests in real estate development, banking, water services, industrials, infrastructure, healthcare and education.

Milbank’s Singapore team was led by capital markets partner James Grandolfo and counsel Paul Pery, along with associate Cheyne Cudby. Alternative investments partner James Warbey and associate Chris Burke provided support from London.

The MTN programme was established on 16 January 2019. The initial drawdown/issuance of 2024 notes closed on 29 January 29, 2019; and additional issuance and tap of 2024 notes and issuance of 2029 notes closed on 12 February 2019.