BPI eyes more green bonds 

The Bank of the Philippine Islands (BPI) said it is considering floating green bonds or other bonds every quarter, which it regards as a cost-effective funding method, according to a report by BusinessMirror.

“We want to offer this every quarter, if it’s possible, because of the advantage on the reserve side,” said BPI Senior Vice President and Treasure Dino R. Gasmen.

“We issued this (Asean Green Bond) 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.”

Late last month, BPI issued P5 billion in 1.5-year Peso-denominated fixed-rate Sustainable, Environmental and Equitable Development Bonds due 2026.

“In this case, the reserve requirement of these bonds is 1 percent only compared to 9.5 percent for regular deposits,” Gasmen said.

He also said SEED or Sustainable, Environmental, and Equitable Development Bonds, were issued at a very narrow spread.

“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 said the bank will issue more green bonds mainly because the market needs it.

“There’s high demand. It comes from the wealth side. Then a lot of demand comes from the branches. It’s what the customers want anyway. We can split the cost with them, so that we can get a better yield, lower cost.”

Offering sustainable bonds, he said, is the most cost-efficient funding method.

He said the lender does not have to raise P30 billion from sustainable bonds, but they can do it possibly every month or quarter at about P5 billion to P10 billion. Tenors could be as low as three months to one year.

“The secret now is that if you want to drive cost down for your loans, you need cheaper funds; that’s the way to do it. Be as efficient (as possible).”

BPI has earlier 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 to August 2, closed on August 1.