Zobel-led Bank of the Philippine Islands (BPI) is weighing the debut issuance of blue or sustainability-linked bonds to fund water and marine projects, though heightened market volatility fueled by conflicts in the Middle East has clouded the timing for a 2026 launch.

During the bank’s press conference for its Sustainability Awareness Month, Eric Roberto M. Luchangco, BPI chief finance officer and chief sustainability officer, said the lender is assessing whether to tap the debt market later this year, depending on a stabilization of global yields.

Luchangco noted that while the bank intends to pioneer water-focused debt instruments, macro environment pressures are forcing a more cautious approach.

“I’m not saying it's going to happen, but it's possible,” Luchangco said, referring to a potential capital raise before the end of the year. “I’m not saying it's going to be blue, but I would like to.”

The bank faces looming debt maturities later this year that require refinancing. However, management is keeping its funding options flexible, balancing bond market conditions against alternative channels such as private placements.

Luchangco indicated that BPI could opt for corporate notes instead, mirroring a transaction last year where the International Finance Corporation subscribed to the bank's entire issuance.

The ultimate size, maturity, and currency denomination of any upcoming fundraise will hinge heavily on prevailing interest rates. “We really have to look at what is the best available source for us at any given time,” Luchangco said, adding that while the bank typically pre-funds its obligations three to six months in advance, current market turbulence makes it difficult to commit to an immediate timeline.

The strategic hesitation underscores a shift in momentum for BPI.

In February, prior to escalating geopolitical tensions between Iran and Israel, BPI President and Chief Executive Officer Jose Teodoro K. Limcaoco had projected a busier issuance calendar on the back of robust local demand. 

Despite the near-term macro headwinds, Luchangco emphasized that BPI remains keen on introducing blue bonds to the local market, citing structural interest from institutional investors focused on environmental, social, and governance (ESG) metrics. Blue bonds specifically earmark proceeds for ocean conservation, clean water access, and marine protection.

“Water is a very basic human necessity,” Luchangco said. “We put the effort to get that framework in, and we think there is demand from some investors. That’s one of the things on my desk.”