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Green Finance / Treasury & Capital Markets
More Philippine lenders ride sustainability train
BDO and BPI issue sustainability bonds totalling 10 billion pesos, IFC invests US$100 million in City Savings Bank social bond
Patricia Chiu 9 Jul 2024

Banco De Oro (BDO) Philippines and Bank of the Philippine Islands (BPI), two of the country’s largest banks, have issues sustainability bonds totalling 10 billion pesos (US$171 million), highlighting the increasing commitment of the banking sector to support environmentally and socially responsible projects.

BPI, the Ayala conglomerate-led lender, announced last week that it is looking to raise some 5 billion pesos through a peso-denominated fixed-rate Asean Sustainable Bonds issuance.

The bonds, which have a tenor of 1.5 years, represent the third tranche of BPI’s 100 billion peso bond programme announced in May 2022. The minimum investment amount is 500,000 pesos, with additional increments pegged at 100,000 pesos each.

In accordance with the Asean Sustainable Bonds standards, the proceeds from the issuance will be used to exclusively finance or refinance ESG-compliant projects. 

BPI says the offer period will run from July 18 to August 2, and is expected to list by August 9.

Meanwhile, in a filing with the Philippine Stock Exchange, BDO, the Philippines’ largest bank, says it plans to raise fresh capital through a similar fixed-rate sustainability bond offering amounting to 5 billion pesos, which will also have a 1.5-year tenor.

This comes after BDO’s 63.3 billion peso sustainable bond issue earlier in January, and its 52.7 billion peso issue in January 2022.

In the same disclosure, BDO says the minimum investment for the sustainable bonds will be 500,000 pesos, with investors able to add increments of 100,000. The offer period will run from July 8 to July 19, with a listing date of July 24, the bank says.

IFC investment

Earlier in June, City Savings Bank, a thrift bank and subsidiary of UnionBank, has issued the first social bond by a thrift bank in the Philippines. The issuance, proceeds of which will be used to provide loans to women in low- to middle-income brackets, received a significant US$100 million investment from the International Finance Corporation (IFC). 

“This landmark issuance will build investor confidence and channel more capital to companies in the Philippines that promote social, economic, and gender equality,” says Riccardo Puliti, IFC’s regional vice president for Asia and the Pacific.

The social bond follows ICMA's Social Bond Principles and the Asean Social Bond Standard.

The two planned sustainability bond issuances, as well as City Savings Bank’s social bond, were announced amid the country’s high interest rate environment, which is currently at a 17-year high of 6.50%. The Bangko Sentral ng Pilipinas has kept borrowing costs unchanged since October 2023, but has hinted at a possible easing by August. 

These issuances reflect a broader trend within the Philippine financial sector towards sustainable development since they leverage the capital markets and channel funds into projects that contribute to the country's environmental and social goals. 

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