The Bank of the Philippine Islands (BPI) informed the Philippine Stock Exchange (PSE) recently that the International Finance Corp. (IFC) is set to invest US$250 million in a green bond that the Ayala-led bank is issuing.
In its report, the BPI noted that it sees the IFC subscription as the largest business that the private sector arm of the World Bank Group has conducted with a financial institution in the Philippines.
The bond’s revenues, according to the lender, will be used to fund “green” assets in the Philippines.
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The lender further stated that the IFC had consented to assist BPI in enhancing its capacity to evaluate the viability and consequences of its climate projects. These initiatives include involving “climate-smart” agriculture, electric vehicles, renewable energy, and energy-efficient structures.
IFC Country Manager for the Philippines Jean-Marc Arbogast was described in the report as saying, “IFC is glad to continue its meaningful cooperation with BPI, a long-time client and partner in supporting climate finance in the Philippines.”
In addition to supporting BPI’s drive towards combating climate change, Arbogast was further quoted as saying, “Thematic bonds form a key pillar of our long-standing commitment to help deepen sustainable capital markets in the country.”
For its part, BPI announced that it might invest the money from the bond sale outside of the Philippines.
Bond to adhere to GBP principles of the ICMA
The bond, which will adhere to the “Green Bond Principles” (GBPs) of the International Capital Market Association (ICMA), is only being subscribed to by the IFC.
In accordance with the ICMA, the GBPs “seek to support issuers in financing environmentally sound and sustainable projects that foster a net-zero emissions economy and protect the environment.”
“GBP-aligned issuance should provide transparent green credentials alongside an investment opportunity,” the statement continued.
The first “green” bond issued by BPI in 2018 was more than four times oversubscribed.
“As a bank known for its commitment to sustainable finance and climate change mitigation, we are delighted that IFC has entrusted us with this significant investment,” BPI President and CEO Jose Teodoro K. Limcaoco was cited as saying in the announcement.
“This is our third green bond issuance, and we will draw on our successful track record to fund projects that will make a lasting difference in the communities in which we operate,” Limcaoco further stated.
The Philippines’ population could be seventy-five percent vulnerable to the effects of natural disasters.
According to the Country Climate Development Report of the World Bank, the country’s GDP might be negatively impacted by climate change by up to 7.6% by 2030.
Since the first “green” bond was issued in 2016, there have been 28 sustainability bond issuances worth more than US$10 billion, according to the most recent data from the Philippines’ Securities and Exchange Commission.
The IFC’s “30 by 30 Zero” program, which aims to assist financial institutions in securing private funding for more climate-related projects in the Philippines, is in line with this “green” bond offering. The ultimate objective is to assist them in increasing their climate-related lending to 30% of their overall portfolios by 2030 with almost no exposure to coal.
In order to facilitate more thematic bond issuances in the nation, the IFC will also collaborate with regulators and hold training sessions and workshops for prospective issuers as part of the initiative.