SEC notes leap in PH ‘green’ bond market
More Philippine companies are devoting resources for environment-friendly and sustainability initiatives, bringing to the local and offshore markets 15 green and sustainability bond issuances worth $3.04 billion to date, a Securities and Exchange Commission (SEC) official said.
This makes the Philippines one of the most dominant in Southeast Asia when it comes to the green and sustainability bond market, SEC Commissioner Ephyro Luis B. Amatong said in a keynote speech at the recent Asean+3 Bond Market Forum Meeting at the ADB Headquarters in Manila.
Indonesia, Malaysia, Singapore and Thailand are also among those that dominate the Association of Southeast Asian Nations (Asean) green and sustainability bond market.
Amatong noted that Philippine banks have had notable success in this market, noting Rizal Commercial Banking Corp., which has issued two sustainability bonds and one green bond totaling $742 million, of which $442 million was peso-denominated.
Ayala-led Bank of the Philippine Islands also issued green bonds under the Asean standards to raise $300 million and 100 million Swiss francs, with the latter even achieving a negative yield, which means that investors even pay the issuer for accepting their money.
State-owned Development Bank of the Philippines, for its part, raised $352 million from the issuance of peso-denominated green bonds in late 2019.
Amatong noted that in 2016, there were only three green bonds outstanding in the whole of Asean totaling $252 million. To date, there are at least 57 issues under the Asean Standards for green, social and sustainability bonds for a total of $4 billion.
In the Philippines, the private sector-led foray into the green and sustainability capital markets first relied on strategic support from development partners, particularly in the case of renewable energy producers, Amatong said.
Overall, seven of the Philippines’ 15 sustainability transactions have received some form of support from or engagement by multilateral development finance institutions, namely the ADB and International Finance Corp.
In 2019 alone, Amatong noted that there were over $3.8 billion worth of bond issuances in Asean, six times more than the $639 million issued in 2018. Sustainability bonds accounted for $1.4 billion, or 36 percent, of last year’s bond market.
“While Asean may still be a relatively small player in the global green/sustainability debt market—with $330 billion raised in 2019—the rate of growth in Asean appears to show the necessary foundations for the development of such a green/sustainability debt market have indeed been laid, including the issuance of a clear set of guidelines for issuers to follow and which investors, both international and domestic, recognize as holistic and reliable,” Amatong said.
Amatong said Asean countries, many of which have significant infrastructure development programs, thus have an opportunity to access much-needed financing. “Resilient and adaptable infrastructure is particularly important to those of us in Asean since we are particularly at risk to the impact of climate change,” he said.
The Asean Green Bond Standards was developed in 2017, in line with the Green Bond Principles formulated by the International Capital Market Association. Fundamentally, the standards provide a framework to ensure transparency and allow investors to make informed judgments regarding an offering’s “green-ness” and sustainability.
The Philippines adopted the framework in August 2018 when the SEC issued the guidelines on the issuance of bonds for the financing or refinancing of new or existing projects that must provide clear environmental benefits, such as those relating to renewable energy, energy efficiency, pollution prevention and control, environmentally sustainable management of living natural resources and land use, clean transportation, climate change adaptation and green buildings.
The Philippines likewise adopted the Asean Social Bonds Standards and Asean Sustainability Bonds Standards. In April 2019, the SEC issued the guidelines on the issuance of bonds for social projects aimed at providing or promoting affordable basic infrastructure, access to health care and education and food security, among others, as well as those for social projects with environmental cobenefits. —Doris Dumlao-Abadilla INQ
