SPEAKING OUT
Ayala Corporation, through its subsidiaries Bank of the Philippine Islands (BPI) and Ayala Land Inc. (ALI), has recently made notable advancements in the capital market by issuing green bonds.
On Aug. 9, BPI successfully raised an impressive ₱33.7 billion from its initial ₱5 billion offering of Peso-denominated fixed-rate Sustainable, Environmental, and Equitable Development (SEED) Bonds.
On July 18, Ayala Land Inc. (ALI) successfully raised ₱20.5 billion through its innovative Sustainability-Linked Financing (SLF) Program. This initiative includes a ₱6 billion Sustainability-Linked Bond (SL-Bond) and a ₱14.5 billion Sustainability-Linked Loan (SL-Loan) from the International Finance Corporation (IFC).
The successive issuances not only highlight BPI’s and ALI’s strategic foresight, their adherence to environmental stewardship and sustainability but also their support for the development and growth of the capital market.
Antonino Nakpil, president and CEO of PDEx, said the BPI SEED Bond pushed the year-to-date bond offerings to ₱266.54 billion, bringing it closer to the year-end target of ₱400 billion.
Anchored by pension funds and institutional investors, high-net-worth and retail clients, the twin offering’s success highlights the increasing importance of Environmental, Social, and Governance (ESG) factors in investment decisions.
BPI’s SEED bonds
The overwhelming demand for BPI’s SEED bonds led to a final issue size 6.7 times the initial offering, a testament to the market’s trust in BPI’s vision and execution. This landmark issuance, the largest thematic bond offering by BPI to date, marks a significant milestone in the bank’s journey towards integrating sustainability into its core operations.
The net proceeds from the SEED bonds will go into financing or refinancing eligible green or social projects such as, but not limited to investments in solar, wind, hydro and other renewable energy sources to reduce reliance on fossil fuels, as well as initiatives aimed at improving energy efficiency in buildings, industrial processes and transportation systems.
As BPI Treasurer Dino Gasmen aptly put it, these bonds will contribute to building a better, more resilient nation.
The SEED Bonds offer a 1.5-year term with an attractive interest rate of 6.20 percent per annum, payable quarterly. This not only provides a lucrative investment opportunity but also ensures that investors are contributing to projects that have a positive environmental and social impact.
The ALI SL-Bond and SL-Loan
The interest rates of the SL-Bond and SL-Loan are directly tied to ALI’s performance on key sustainability metrics, such as reducing emissions by 42 percent from its malls, offices, and hotels by 2030, and achieving EDGE Zero Carbon certification for 1.5 million square meters of office properties by 2025.
As PDEx President Nakpil explained: ALI’s Sustainability-Linked Bond has a coupon rate tied to its observance of sustainability targets. The rate will rise if targets are not met on certain milestone dates, ensuring that ALI remains accountable and committed to its green goals.
Nakpil also noted that this is a pioneer issuance for a 10-year tenor and ALI will be the first to use PDTC’s electronic reports portal, making this the first fully paperless bond issuance.
The market’s response to the ₱6 billion SL-Bond saw demand reach ₱18.2 billion.
The Securities and Exchange Commission (SEC) rightly commended Ayala Land Inc. (ALI) for its pioneering efforts. SEC Commissioner McJill Bryant Fernandez emphasized that this move is not just a win for ALI but for the entire country, as it paves the way for sustainable finance in the Philippines.
This sentiment is echoed by Jean-Marc Arbogast, IFC country manager for the Philippines, who praised ALI’s leadership in sustainability and expressed hope that this initiative would inspire other industry players to follow suit.
The ₱14.5 billion Sustainability-Linked Loan (SL-Loan) from the International Finance Corporation (IFC), ALI’s first loan from a multilateral agency, will enable ALI to implement energy and water-saving measures across its commercial real estate portfolio. These measures include energy-efficient lighting and cooling systems, passive building design, low-flow water fixtures, and water harvesting and recycling systems.
Ayala Land’s Sustainability-Linked Financing (SLF) Framework is aligned with international standards such as the ASEAN Sustainability-Linked Bond Standards (ASEAN SLBS) and the Sustainability Linked Loan Principles (SLLP), proof of ALI’s adherence to global best practices.
In conclusion, BPI’s SEED Bonds and Ayala Land’s ₱20.5 billion Sustainability-Linked Financing Program are landmark achievements that set a new standard for Philippine business. They are more than just financial instruments; they exemplify how corporates can play a pivotal role in driving positive change and building a more sustainable future for all.
By integrating sustainability into their financial strategy, BPI and ALI are leading the way toward a greener, more sustainable future, proving that financial success and environmental responsibility can go hand in hand. ([email protected])