Promoting Green Local Currency Bonds for Infrastructure Development in ASEAN+3
- ADB
- Apr 2018
- Asian Development Bank (ADB)
- International
Green bonds are debt securities whose proceeds are used to finance projects or assets with positive environmental benefits. Financing infrastructure projects with green local currency-denominated bonds is highly desirable for the following two reasons. First, financing infrastructure projects with long-term local currency bonds instead of short-term foreign currency bank loans would make projects less vulnerable to currency and refinancing risks, especially as they generate revenue in the local currency. Without costly hedging, which may not be available for longer-dated tenors in all currencies, an exchange rate depreciation can increase debt service requirements relative to local currency revenue, potentially threatening the viability of a project...
