A new peso-denominated green bond has been introduced in the Philippines, issued by the International Finance Corporation (IFC) and intended to strengthen and boost the region’s renewable energy and climate finance sectors.

The bond, dubbed ‘Mabuhay bond’ after the Filipino greeting, is the first of its kind for the organisation, which is itself the private development arm of the World Bank Group.

With its value estimated at up to $90m, it is hoped that the 15-year bond will help mobilise financing for the region’s clean energy developments, an area that has been struggling due to an apparent reluctance from investors.

Indeed, the lack of peso-denominated green bonds has been identified as a reason for the country’s stagnating renewable energy opportunities, with the Asian Development Bank (ADB) releasing a report this April that stressed the benefits of green bonds in meeting the region’s long-term financing needs and helping its adoption of low-carbon energy alternatives.

The report said there is a “large unmet demand for corporate bonds among domestic institutional investors”, meaning issuers are uninterested in green initiatives as they incur additional costs which are absent from non-green issues.

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Yuan Xu, IFC’s country manager for the Philippines, said that ‘deepening’ the domestic capital market “is critical for the long-term sustainability of the country’s economy”, adding that the new bond reveals the IFC’s commitment to helping the region achieve climate targets. She also stressed the benefits of green bonds as a method of cleaning up emerging economies which are more at risk from climate change.

Funds raised under the scheme will be put towards repairing Malitbog Geothermal Power station, owned by local renewable energy developer Energy Development Corporation (EDC) and located in Kananga city. The plant was damaged and forced to close due to an earthquake last year. As such, plans are being made to strengthen and improve the building’s protective features against natural disasters.

Additionally, the money will be used to improve the plant’s energy efficiency, reduce blackout frequency, and address health, safety and environment (HSE) risks.

EDC is the largest geothermal energy producer in the country, making up around 9% of its total electricity supply. It is second only to the US in global rankings of geothermal energy producers.

Such a move adds to the growing attempts to clean up the South East Asia region, amidst fears that it will experience the greatest impact from climate change and following criticisms over its slow progress on green initiatives, with a UN report released earlier this year stating the area is failing to achieve two thirds of the sustainable development goals.

Green bond schemes have already been implemented in Singapore and Indonesia, with the former introducing a Green Bond Grant Scheme and the latter becoming the first Asian country to sell green bonds internationally when it secured a $1.25bn deal earlier this year. However, many still say such measures are not ambitious enough considering the scale of ecological damage being seen in the region, with its marine and forest ecosystems being lost at a faster rate than anywhere else.