HSBC Philippines sees pickup in sustainability bond issuances
HSBC Philippines expects sustainability bond issuances to pick up after a slowdown amid high interest rates, an official said.
The growth will be driven by the Bangko Sentral ng Pilipinas’ (BSP) expected easing cycle, coupled with the ongoing push for companies and banks to develop sustainability frameworks and increasing demand for this type of financing among stakeholders, HSBC Philippines Corporate Sustainability Vice President Ceejay Hernandez said in a webinar on Friday.
“Money is expensive right now, but coupled with the increasing demand, the increasing regulatory space in terms of sustainability, and also the increasing understanding and demand on the stakeholder, it (the sustainable bond market) continues to grow,” Mr. Hernandez said.
Sustainable financing was already on the rise years ago but began to slow down when the central bank began its tightening cycle, he said.
“We’ve seen a considerable increase, especially in renewable energy or green financing. That definitely spelled a boom, in a sense, of sustainable financing. However, the increase in interest rates affected that, because when we look at the 2024 numbers, we’ve seen a bit of slowdown in terms of investments in sustainability,” Mr. Hernandez said.
He added that a supportive regulatory body has also helped boost issuances of sustainability bonds recently, noting the mandate issued by the BSP for lenders to adopt the Philippine Sustainable Finance Taxonomy Guidelines (SFTG).
Banks have until the end of this year to comply with the SFTG. The guidelines serve as a tool to classify if an economic activity is environmentally or socially sustainable to serve as a guide for stakeholders in making investment or financing decisions.
“Some of the banks, especially the smaller ones, it’s a bit of a challenge to set up a new framework. The idea of the BSP is really to work with these banks to set them up. And so, far as we’re seeing, a lot of banks, especially locally, have issued green bonds or blue bonds already because you cannot issue these bonds without sustainable finance frameworks,” Mr. Hernandez said. — AMCS