Friday, 24 September, 2021

ADB issues first blue bonds for ocean investments

  • Staff Correspondent
  • 16 September, 2021 12:00 AM
  • Print news

Asian Development Bank (ADB) has issued its first ever dual-tranche blue bonds denominated in Australian and New Zealand dollars that will finance ocean-related projects in Asia and the Pacific.

A 15-year issue worth Australian $208 million (around US$151 million) was purchased by The Dai-chi Life Insurance Company and arranged by Citigroup Global Markets Limited.

A 10-year issue worth NZ$217 million (around US$151 million) was purchased by Meiji Yasuda Life Insurance Company and arranged by Credit Agricole CIB.

The bonds were issued under ADB’s expanded Green and Blue Bond Framework, says an ADB release.

“Having our first 15-year Australian dollar and 10-year New Zealand dollar blue bonds under the ADB’s Green and Blue Bond Framework is a new milestone for sustainable ocean finance,” said ADB Vice-President for Finance and Risk Management Ingrid van Wees.

“The tenor reflects the needs and our long-term support for the sector.”

“With our framework, we set a new standard for blue financing in the market that can be replicated,” said Wees.

The bonds are part of ADB’s Action Plan for Healthy Oceans and Sustainable Blue Economies launched in 2019.

It aims to catalyze sustainable investments in Asia and the Pacific by committing to invest and provide technical assistance of at least $5 billion by 2024.

“The Action Plan for Healthy Oceans and Sustainable Blue Economies is a vital part of ADB’s strategy to expand the necessary support for its developing member countries (DMCs) to invest in healthy oceans, ensure the achievement of SDG 14, and contribute to the security and prosperity of the region,” said ADB vice-president for Knowledge Management and Sustainable Development Bambang Susantono.

 Sustainable Development Goal (SDG) 14 addresses "life below water" and is one of 17 SDGs established by the United Nations in 2015. The funding gap to support healthy oceans is getting wider every year and the scale of the problem requires a leap from small transactions to transformative market deals.

Innovative financial products like blue bonds diversify and expand the investor base, thereby increasing the amount of capital that can be invested in ocean health.

ADB’s expanded Green and Blue Bond Framework has received a Second Party Opinion from the leading evaluator of green bond investment frameworks CICERO Shades of Green. This provides investors with confidence that ADB bonds are mitigating climate change and protecting ocean health.

An example of an eligible project that may be financed by the bond is the Greater Malé Waste-to-Energy Project in Maldives.

It will stem the flow of plastics and other wastes to the ocean and reduce greenhouse gas emissions.

Another is the Anhui Huangshan Xin’an River Ecological Protection and Green Development Project in the People’s Republic of China.

It will reduce non-point source pollution to the marine environment from “source to sea” by supporting green farming and controlling pesticide and fertilizer use.

ADB’s blue bonds are replicable, scalable, and aim to grow the ocean economy across Asia and the Pacific.

The proceeds will finance projects that enhance ocean health through ecosystem restoration, natural resources management, sustainable fisheries and aquaculture, reduction of coastal pollution, circular economy, marine renewable energy, and green ports and shipping.

At the same time, these investments will support sustainable economic growth and jobs for the future.

DMCs can adopt ADB’s approach and issue sovereign blue bonds to finance important ocean health projects that will both protect vital ocean resources and provide a much-needed economic boost.