Sustainability bonds generate P236B in H1

The use of a debt instrument of emerging popularity called sustainability bonds has become a good source of financing for the government as it already raised P236 billion in the first half.

The 2023 Sustainability Report of the Bangko Sentral ng Pilipinas (BSP) released Friday indicated that the amount was higher than the P173.2 billion sustainable bonds issued from 2017 to 2023.

Foreign-denominated sustainability bonds reached $1.6 billion, higher than the $1.5 billion recorded in the past seven years.

Sustainability bonds fund projects that emit zero or less carbon dioxide and other greenhouse gases to mitigate the effects of climate change, such as extreme floods and wildfires.

17 floated thus far

The BSP said a total of 17 issuers engaged in the bond transactions in the previous years and consisted mostly of seven banks.

The others were two issuers from each of these sectors: real estate, electrical utilities, and renewable energy. The rest consisted of one issuer from each of these entities: national government, consumer services providers, supranational groups and water utilities firms.

In the first quarter, private companies already issued $12.85 billion or 26 percent of the $49.14 billion sustainability bonds in Southeast Asia.

Meanwhile, the government offered sustainability bonds amounting to $3.55 billion from 2022 to 2023.

“The appetite for the issuance of sustainable bonds is seen to be sustained considering the preliminary results of the 2023 Banking Sector Outlook Survey,” BSP said.

The survey showed the share of banks keen to fund sustainability projects until next year expanded to 90.3 percent last year from 79.3 percent in 2021.

The BSP added banks can now mobilize around P2 billion more funds for sustainability projects following its policy announcement allowing a 200-basis point reduction in banks’ reserve requirement ratio for sustainable bonds.