SET-listed B.Grimm Power Plc (BGRIM) has become Thailand's first real-sector corporation to issue green bonds, worth 5 billion baht, with the Asian Development Bank (ADB) purchasing all the debentures.
B.Grimm, one of Thailand's leading private power producers, yesterday announced the issuance of Thailand's first certified climate bonds.
The company's maiden green debentures, with five-year and seven-year maturities at 3.6% interest, were subscribed by the ADB.
Proceeds from the debenture issue will go towards B.Grimm's renewable energy development projects in Thailand as part of the company's contribution to establish a low-carbon pathway for sustainable economic growth.
Proceeds will be earmarked for B.Grimm's nine operational solar power plants with a total capacity of 67.7 megawatts and seven other plants under construction, all in Thailand, with a combined production capacity of 30.8MW.
Green bond issuance plays an important part in B.Grimm's drive to raise the share of renewable energy generation in its overall portfolio from 10% to 30% by 2021, said president Preeyanart Soontornwata.
"The ADB's support is invaluable to ensure that the bonds comply with the International Capital Markets Association's green bond principles and climate bond initiative standards," Mrs Preeyanart said.
B.Grimm had total liabilities of 54 billion baht as of Sept 30, of which 43-45 billion or 80% of total debt was project finance and project bonds.
The company's debt-to-equity ratio is currently around 0.5 times and the loan rate cost stands at around 5-5.5%.
At present, B.Grimm has total production capacity of about 3,200MW, with plans to increase the amount to 5,000MW over the next two years.
The company has a plan to use capital worth 10 billion baht on an annual basis for debt repayment and investment continuity in existing projects.
The objectives will require funds for investing in new projects worth a combined 100 billion baht, whereby the source of funds will come from the company's accumulated profit, debt instruments, bank loans and other funding sources, Mrs Preeyanart said.
"But green bonds are an alternative [funding] choice and help the company to reduce loan cost," she said.
Michael Barrow, director-general of the private sector operations department at the ADB, said the green bonds "will help Thailand achieve its target of reducing greenhouse gas emissions by an unconditional 20% by 2030".
The green bond investment represents the ADB's third transaction with B.Grimm, following a loan accord early this year for expanding into renewable and distributed power generation markets throughout Southeast Asia and a subscription to the company's initial public offering shares last year.
For the ADB, the debenture subscription to B.Grimm's green bonds is the bank's second investment in such bonds.
The ADB's investment in B.Grimm's green bonds is consistent with the bank's 2030 strategy, which mandates that at least 75% of the number of the ADB's committed operations support climate change mitigation and adaptation by 2030, with climate-related finance from its own resources reaching US$80 billion during 2019-30.