BPI offers 1.5-year sustainability bonds at 5.85%
Bank of the Philippine Islands (BPI) has priced its sustainability-linked bond issuance at 5.85 percent per annum, or above market rates, amid a monetary policy easing cycle.
In a stock exchange filing on Tuesday, the Ayala-led bank said the bonds had a tenor of one and a half years and these would be paid quarterly.
BPI, the country’s second-largest private bank, plans to raise at least P5 billion from its Supporting Inclusion, Nature and Growth bonds. It has an option to upsize the debt issuance.
The offer period will run until May 30, with lenders required to invest a minimum of P500,000 and in increments of P100,000.
Listing on the Philippine Dealing and Exchange Corp. is scheduled on June 10.
The notes likewise represent the first tranche of BPI’s P200-billion bond and commercial paper program approved in October 2024.
Under the bank’s sustainability funding framework, the proceeds of the offer must only be used to support sustainability-related projects, such as renewable energy power plants and clean water and sanitation. Unused proceeds cannot be spent on other purposes.
BPI Capital Corp. and Standard Chartered Bank were tapped as the joint lead arrangers and selling agents of the offer.
The bonds were priced slightly above the rates of the secondary market. As of Monday, the current interest rate benchmark based on Philippine Bloomberg Valuation for a tenor of 1.5 years averaged 5.771 percent.
Locking in higher yields
The offering also comes after the Bangko Sentral ng Pilipinas (BSP) decided to slash rates in April by 25 basis points to 5.5 percent.
The offer thus seeks to attract investors who are chasing yields ahead of further interest rate cuts by the BSP.
Last August, BPI raised P33.7 billion from its largest thematic bond offer to date as high demand for sustainability-linked debt allowed it to upsize the issuance by more than 500 percent.
The bonds have a term of 1.5 years and carry an interest rate of 6.2 percent. These were also issued when the BSP first cut rates after nearly four years.
At the same time, an easing cycle also historically translates to more loan demand.
In BPI’s case, strong lending in the consumer and micro, small and medium enterprise segments buoyed its net income in the January to March period by 9 percent to P16.6 billion, its highest first-quarter bottom line to date.
