PH borrowings via ‘green’ bonds on the rise

“Green” bond issuances by the Philippine government and private corporations rose to $2.8 billion worth during the first half of 2022, already exceeding borrowings through environmental, social and governance (ESG) debt securities in the past two years.

Finance officials said green bonds may become a mainstay in the Philippines’ foreign borrowings mix, depending on market conditions.

The latest data of the Washington-based Institute of International Finance (IIF) showed that the Philippines issued $2.3 billion in public and private ESG bonds in the first quarter of this year, or 4.6 percent of the global total. During the second quarter, the Philippines raised $500 million from green bonds, 1.2 percent of the total debt issuance from April to June.

IIF data showed that the Philippines’ cumulative first-half ESG issuances surpassed the combined $2.7 billion in the two preceding years—$1.8 billion (1.6 percent of total) in 2020, plus $900 million (0.5 percent of total) in 2021.

Globally, “as broad market disruption continued, flows to ESG funds fell for a second consecutive quarter in the second quarter of 2022” even as “they remain in positive territory year-to-date in sharp contrast to large outflows from conventional funds,” the IIF said in a report.

“Global sustainable/ESG debt issuance exceeded $645 billion in the first half of 2022; while some 15 percent below year-ago levels, this was double the pace of the first half of 2020. Sustainability-linked bond and loan markets also saw robust issuance in the first half of 2022. Emerging and frontier markets issued over $120 billion in sustainable/ESG debt in the first half of 2022, up from over $100 billion a year ago,” the IIF added.

In a text message to the Inquirer, National Treasurer Rosalia de Leon said the Bureau of the Treasury was “as always, watching the markets” for another ESG issuance moving forward, under the sustainable finance framework put in place by the Bangko Sentral ng Pilipinas and the Department of Finance (DOF) last year.

“Any offshore issuance would take into account supply dynamics, greenium levels (if applicable) and the current rate environment,” Undersecretary Mark Dennis Joven, who heads the DOF’s international finance group, told the Inquirer.

The Philippines raised $1 billion from its first-ever, US dollar-denominated, 25-year green bond issuance last March. In April, it followed through with a 70-billion-yen green samurai bond fund raising across four tenors.

The government had programmed $7 billion in foreign commercial borrowings or offshore bond issuances for 2022, of which the Philippines already raised $2.8 billion worth. The Philippines had yet to raise funds from the euro debt market this year, while it shunned the renminbi-denominated panda bonds being issued in China two years into the COVID-19 pandemic.