Financing instrument and amount
THB 10 billion (USD 320.4 million)* through green bonds
Background
Energy Absolute is one of the largest renewable energy companies in Thailand. Energy Absolute aimed to raise THB 10 billion (USD 320.4 million)* through its maiden green bond issuance. The bonds were issued with tenors of three, five, seven, and ten years, with proceeds used to support the long-term financing of its 260 MW Hanuman wind farm in Chaiyaphum province in Thailand.
Approach
Energy Absolute is one of the largest renewable energy companies in Thailand. The company is listed on the Stock Exchange of Thailand and its main businesses are renewable energy generation, and biodiesel production and distribution.
In 2019, Energy Absolute aimed to raise THB 10 billion (USD 320.4 million)* through its maiden green bond issuance. The bonds were issued with tenors of three, five, seven, and ten years, with proceeds used to support the long-term financing of its 260 MW Hanuman wind farm in Chaiyaphum province, Thailand, including the refinancing of short-term supplier credit that was used to help complete construction of the wind farm. The Hanuman wind farm is Thailand’s biggest wind farm and commenced commercial operations in April 2019. It has a long-term power purchase agreement with the electricity generating authority of Thailand.
A key component of Energy Absolute’s maiden green bond issuance was the Asian Development Bank (ADB)’s cornerstone investment of up to THB 3 billion (USD 96.1 million)* in the 7-year tranche. ADB also facilitated the certification of the entire THB 10 billion (USD 320.4 million)* bond issuance as green under the Climate Bond Standards of the Climate Bonds Initiative. An independent verifier will confirm the bonds are eligible under the Climate Bond Standards sector criteria and aligned with the International Capital Market Association’s Green Bond Principles and ASEAN’s Green Bond Standards. To maintain its certification, Energy Absolute will provide an annual monitoring report on the windfarm’s operations.
Results
Energy Absolute’s maiden green bond was issued in October 2019 and was oversubscribed. Top registered bondholders were ADB, insurance companies, local commercial banks, and asset management firms.
The success of Energy Absolute’s green bond helped accelerate development of Thailand’s green bond market by creating momentum to mobilise commercial investors and issuers in the emerging asset class. ADB’s involvement helped encourage local regulators, investors, and issuers to adopt international best practices, in turn improving awareness on the benefits of green bonds among government decision makers, and potential issuers and buyers of the benefits of this asset class. As of December 2022, THB 48.1 billion (USD 1.4 billion)** in green bonds have been issued since Energy Absolute’s bond issuance, from just THB 7 billion (USD 199.8 million)** in total issuances prior to the project.
Key Learnings
Strong credit profile and track record for issuer:
Prior to the issuance, green bonds were not fully understood by Thai investors and demand for such instruments were uncertain. Energy Absolute’s sound business fundamentals, including a strong credit profile and track record of successful fundraising, provided sufficient assurances to domestic investors of the credibility of green bonds, despite the market’s then limited appreciation of the asset class, and the bonds were oversubscribed when issued.
Role of development financial institution when introducing new products to market:
ADB played a critical role in using its influence and integrity to bolster the marketability of Energy Absolute’s green bond and helped crowd-in market participants such as insurance companies, retirement funds, and other leading domestic investors. ADB’s role in facilitating the certification of Energy Absolute’s green bonds also helped reduce concerns on the market demand for such asset classes.
Sources
- ADB (2022). Extended annual review report: Energy Absolute green bond for wind power project (Thailand). Available at: https://www.adb.org/sites/default/files/project-documents/53255/53255-001-xarr-en.pdf
- ADB (2019). Proposed debt investment: Energy Absolute green bond for wind power project (Thailand). Available at: https://www.adb.org/sites/default/files/project-documents/53255/53255-001-rrp-en.pdf
- *Note that the USD values are calculated based on the average 12-month exchange rate in 2019. Retrieved form the site: https://www.x-rates.com/average/?from=USD&to=THB&amount=1&year=2022#google_vignette
- **Note that the USD values are calculated based on the average 12-month exchange rate in 2022. Retrieved form the site: https://www.x-rates.com/average/?from=USD&to=THB&amount=1&year=2022#google_vignette
