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CASE STUDY 24:                 PHILIPPINES – LEYTE GEOTHERMAL PARTIAL
                              CREDIT GUARANTEE
 Barriers               Lack of long term financing

 Instrument             Partial credit guarantee

 Application            n/a

 Amount                 US$30 million


PROJECT BACKGROUND AND OBJECTIVES                          allowed bondholders to pr esent or “put� their bonds to
                                                           the World Bank at maturity for payment of principal.
The Leyte-Luzon geothermal power plant project was
implemented by the National Power Corporation (NPC),       OUTCOMES
the Philippine National Oil Company (PNOC), and the
                                                           With the support of the guarantee program, NPC was
Electricity Development Corporation. The World Bank
                                                           able to get a bond with a 15 year maturity, which was
provided a grant (from GEF), which reduced the cost of
                                                           greater than the longest maturity previously attained by
the project and made it more financial attractive to
                                                           an issue from Philippine sovereign entity (10 years). The
investors to use geothermal energy instead of coal.
                                                           15 year maturity was obtained at the favourable pricing
INSTRUMENTS USED                                           of 2.5% over the yield of US treasury of the same
                                                           maturity.
The grant was used as partial credit guarantee, which
was aimed to help the government access long term
financing on the international capital market and to
expand loan tenor.
                                                                 Further reading
INSTITUTIONAL ARRANGEMENTS
                                                                 GEF, Philippines – Leyte-Luzon Geothermal
The NPC raised around US$1,300 million in project                Project, 1994 – click here
finance through a 15 years’ bond issue on the
international capital market. The World Bank provided a
partial credit guarantee to the bond issue structured as
a put option for principal repayment at maturity. It




1 | R E F I N e www.worldbank.org/energy/refine