The Bank of the Philippine Islands (BPI) is considering the sale of green or other bonds every quarter as an efficient and cheap source of fresh funds.
“We plan to offer this every quarter if possible because of the advantage on the reserve side,” BPI senior vice president and treasurer, Dino R. Gasmen, said.
He told reporters the bank’s P100-billion ASEAN green bond offering takes advantage of incentives provided by the Bangko Sentral ng Pilipinas (BSP).
“Specifically, if you issue a peso bond that’s ESG paid, the reserve requirement is actually very low,” Gasmen explained.
In July, BPI issued P5 billion fixed-rate Sustainable, Environmental and Equitable Development (SEED) bonds due 2026.
“In this case, the reserve requirement of the bonds is 1 percent only compared to 9.5 percent for regular deposits,” Gasmen said.
He also said the SEED bonds were sold within a very narrow 80-basis point spread, or cheaper than any time deposit of the same nominal rate.
“So even if policy rates go down, this will still give us an advantage,” he said.
BPI president Jose Teodoro K. Limcaoco said the lender will issue more green bonds given demand for the product from the wealth sector and from its branches.
According to him, bond size could be P5 billion to P10 billion each time with tenors as low as three months to one year.
“The secret is that if you want to drive down the cost of your loans, you need cheaper funds. That’s the way you do it. Be as efficient as possible,” he said.
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 demand for the BPI SEED Bonds came from institutional, high-net worth and retail clients.
While the principal amount is only P5 billion, the bank has the option to upsize.
The offer originally set to run from 19 July to 2 August this year closed a day early on 1 August instead.
