BPI promises 6.2% yield for fresh green bonds

Bank of the Philippine Islands (BPI) has set an interest rate of 6.2 percent per annum for its latest bond offering worth P5 billion.

The Ayala-led bank on Friday said it would also increase the offer in case of strong demand.

The thematic bonds, which BPI called Sustainable, Environmental and Equitable Development (SEED) bonds, will be issued at par value and paid quarterly. Those interested to buy the so-called green bonds would need to cough up an initial amount of P500,000, then pay increments of P100,000 thereafter for additional investments.

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If investors were to buy BPI’s offer before the Bangko Sentral ng Pilipinas (BSP) cuts rates, they would be able to “enjoy above-market rates,” according to Francis Ferdinand Subido, senior research analyst at AP Securities Inc.

“They could also see some capital appreciation in the price of their bonds in the event that they try to sell it before maturity,” he said.

The BSP’s key rate currently stands at 6.5 percent, but the Monetary Board is projected to cut the policy rate by a total of 50 basis points this year.

The bonds, due in one and a half years, will be offered until Aug. 2. Listing on the Philippine Dealing and Exchange Corp. (PDEx) is scheduled on Aug. 9.

“BPI will use the end proceeds of the offer to finance or refinance new or existing eligible green and/or social projects as designed under, and consistent with, BPI’s Sustainable Funding Framework,” the bank said in a statement.

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Under the framework, the proceeds must be exclusively used to support sustainability-related projects, such as renewable energy power plants.

BPI Capital Corp. and Standard Chartered Bank were tapped as the joint lead arrangers and selling agents for the offer.

The latest issuance is the third tranche in BPI’s P100-billion bond program approved in May 2022.

The first tranche worth P20.3 billion was issued in January last year, while the second tranche worth P5 billion was issued in October.

PDEx expects P400 billion in domestic bond listings this year amid prospects of interest rate cuts that could mean higher bond prices for issuers.

So far, PDEx has seen P177.14 billion worth of bond listings.