BPI may issue first blue bond this year

BANK of the Philippine Islands (BPI) could issue its first blue bond within the year but remains open to other funding options amid surging interest rates.

“One of the things that we would really like to do is issue a blue bond which is linked to water-related investments. Not only because we put the effort to get the framework in, but also because we think that there is demand from some of the vendors. As we market the bond, we create awareness for some of these projects,” BPI Chief Financial and Sustainability Officer Eric M. Luchangco said at a media briefing on Thursday.

The bank has over P50 billion in assets it can finance under the blue bond framework, he added.

However, higher interest rates due to the Middle East conflict have made the bank hesitant about tapping the debt market.

“I think the deeper issue potentially preventing or affecting the timing of the issue is probably the global circumstances. If you had asked us in February, for example, whether we thought the market would be open for us to do an issue, I think the answer would have been, ‘we don’t have any issues there.’ But the Middle East conflict really created some more volatility in the market. And I mean, I’m sure you’ve seen interest rates swing very high,” he said at the sidelines of the same briefing.

The bank could also tap other funding options to refinance a coming maturity in the third quarter, such as how it issued a green bond last year with the International Finance Corp. (IFC) as the sole subscriber that invested $250 million to help boost climate finance in the country.

“With IFC, it was not a widespread bond, but basically a corporate note that we bought.

If that turns out to be more efficient for us, then we may go down that route again. Or if the public market seems more efficient for us, then we may go down that route,” Mr. Luchangco said.

The bank in June last year also raised P40 billion from 1.5-year SINAG or Supporting Inclusion, Nature, and Growth Bonds at 5.85% per annum, well above the P5-billion target.

He added that the bank is not under any pressure to issue bonds as market conditions remain uncertain.

BPI’s net income rose by 1.7% to P16.92 billion in the first quarter. Its shares went up by P2.4 or 2.76% to close at P89.50 each on Thursday. — Aaron Michael C. Sy