Environmental Finance's Sustainable Debt Awards 2024

Award for innovation - use of proceeds (green bond): Asian Infrastructure Investment Bank

The Asian Infrastructure Investment Bank (AIIB) was described as the "standout" winner for its innovative debut Climate Adaptation Bond (CAB) focused on increasing financing for climate adaptation projects in Asia.

The five-year CAB raised AUD500 million ($338 million) in May 2023, with the deal more than twice oversubscribed by investors. The AIIB said many investors specifically cited the climate adaptation theme as being key reason for their participation.

The AIIB said the proceeds will be used to finance sustainable projects which identify at least 20% of their total project financing as going towards climate adaptation projects as defined in the 'Joint Methodology for Tracking Climate Change Adaptation Finance' published by 10 multi-lateral development banks (MDBs) in 2021.

One Sustainable Debt Awards judge said the green bond market has been "overwhelmingly" focused on climate mitigation projects to date. As a result, this bond focused on climate adaptation and resilience projects should be "recognised and encouraged" by the market. Another judge said the CAB showed "genuine innovation in directing use of proceeds to climate adaptation finance".

Among the projects financed, the AIIB highlighted the Punjab Municipal Services Improvement Project in India which is improving water infrastructure in the Indian state and the Henan Flood Emergency Rehabilitation and Recovery Project in China. The MDB said that 35% and 39% of the AIIB financing for these projects were identified as adaptation financing, respectively.

“At AIIB, we recognise the urgent need for innovative financial solutions to address climate change impacts, particularly in vulnerable regions across Asia,” AIIB funding head Darren Stipe told Environmental Finance. “The introduction of our CAB underscores our priority to mobilise capital towards resilient infrastructure and adaptation measures. As we move forward, AIIB will continue leading the charge in using these vital instruments, catalysing sustainable development and fostering climate resilience throughout the region.”

Deal highlights

Issuer: AIIB
Issue size: AUD500 million ($338 million)
Maturity date: 17 May 2028
Coupon: 4%
Use of proceeds: Climate adaptation
Lead managers: Commonwealth Bank of Australia, Deutsche Bank, JP Morgan, and TD Securities
Principles/Guidelines: Joint Methodology for Tracking Climate Change Adaptation Finance
External reviewer: Sustainalytics
Credit Rating: Aaa (Moody's); AAA (S&P); AAA (Fitch)