Zobel-led Bank of the Philippine Islands is considering undertaking a public offering of ASEAN green bonds every quarter following the success of its P5 billion 1.5-year Peso-denominated fixed-rate Sustainable, Environmental, and Equitable Development Bonds due 2026.
In a media briefing, BPI Senior Vice President and Treasurer Dino Gasmen said “we want to offer this every quarter, if it's possible, because of the advantage on the reserve side.”
“We issued this actually to take advantage of the incentive provided by the BSP (Bangko Sentral ng Pilipinas). Specifically, if you issue a peso bond that's ESG paid, the reserve requirement is actually very low,” he explained.
Gasmen noted that, “In this case, the reserve requirement of these bonds is 1 percent only compared to 9.5 percent for regular deposits.
He also pointed out that the SEED bond was issued at a very narrow spread and “It's actually about 80 basis points cheaper than the time deposit of the same nominal rate. So even if policy rates go down, this will still give us an advantage.”
BPI President Jose Teodoro K. Limcaoco stressed that they will issue more green bonds mainly because the market needs it, noting that “there's a lot of high demand. It comes from the wealth side. Then a lot of demand comes from the branches.”
“Because it's what the customers want anyway. We can split the cost with them, so that we can get a better yield, lower cost,” he added.
BPI has decided to shorten the public offering period of its P5 billion sustainable bonds due to overwhelming demand.
In a disclosure to the Philippine Stock Exchange, the bank said strong demand came from institutional, high-net worth and retail clients for the BPI SEED Bonds.
It noted that, while the principal amount is P5 billion, the bank has an option to upsize. The offer, which was originally set to run from July 19, 2024 to August 2, 2024, will now close early on August 1, 2024.
“The Bank expresses its gratitude to the investing public’s strong support for the Offer,” it added.
The BPI SEED Bonds will be issued at par value, bearing an interest rate of 6.2000 percent p.a., paid quarterly.
The planned issue and listing date of the BPI SEED Bonds on August 9, 2024 with the Philippine Dealing and Exchange Corp. remains unchanged.
BPI Capital Corporation and Standard Chartered Bank are the Joint Lead Arrangers and Selling Agents of the Offer.
The bank said it will use the net proceeds of the offer to finance or refinance new or existing Eligible Green or Social Projects as defined under, and consistent with, BPI’s Sustainable Funding Framework.
“BPI is committed to creating value not only for its businesses, but also for its stakeholders, the environment, and the communities in which it operates.
“It strives to have sustainability at the core of its corporate strategies, ultimately balancing its growth aspirations with its environmental and social responsibility,” the bank said.
It added that, “BPI is keen to use the offer of BPI SEED Bonds as an opportunity to promote projects that contribute to the United Nations Sustainable Development Goals.”
The Securities and Exchange Commission has confirmed that the BPI SEED Bonds qualify as ASEAN Sustainability Bonds on July 18, 2024.
Bonds carrying this classification have been independently verified to have systems in place to ensure that proceeds raised will be directed toward projects that benefit society.
This gives bondholders confidence that their investments will be used to make a positive environmental and social impact.