BUSINESS

SEC unwraps blue bond rules

Blue bonds refer to a subset of green bonds and sukuk, the proceeds of which will exclusively be used to finance or refinance new and/or existing eligible blue projects and activities

DT · Dec 6, 2023, 12:20 AM

Photograph courtesy of SEC At the launch of the blue bond guidelines are (from left) Lloyd Cameron of the British Embassy in Manila; Romell Antonio Cuenca, assistant secretary and deputy executive director, Climate Change Commission; Scott Roberts, ADB Green Finance hub unit head, Southeast Asia; Federico Tancongco, chief compliance officer of BDO Unibank Inc.; Aileen Ruiz-Zarate, senior investment officer, International Finance Corp.; SEC chairperson Emilio Aquino and Commissioner Kelvin Lester Lee; Xiaoqin Fan, ADB. finance sector director; Jo Ann Bueno-Eala; John Erick Avelino of the Department of Environment and Natural Resources; and Katherine Thoday, principal environment specialist, ADB. At the back are (from left); Jason Mortimer, Nomura Asset Management, Japan; and Joaquin Alfonso Javier of the Bureau of the Treasury.

The Securities and Exchange Commission, or SEC, has released the guidelines for blue bond floats on 5 December to encourage more companies to make use of the new investment product in achieving their sustainability goals.

The blue bond float aligns with efforts to promote sustainability while boosting participation in the capital market.

Blue bonds refer to a subset of green bonds and sukuk, the proceeds of which will exclusively be used to finance or refinance new and/or existing eligible blue projects and activities.

Blue projects may include ecosystem management and natural resources restoration of coastal, marine, river, lake, and other marine- or water-based ecosystems; and sustainable fisheries management.

The guidelines were launched alongside a conference entitled, "Advancing the Role of Capital Markets in Financing the Philippines' Blue Economy," co-organized with the Asian Development Bank, and in partnership with the Government of the United Kingdom.

The conference sought to analyze the status and the potential of blue bonds in the local market, explore innovative financial instruments and capital market solutions to support the blue economy, and provide a platform for stakeholders to discuss opportunities to finance investments into the blue economy.

Sustainable capital

"As we unveil the guidelines on blue bond issuances, we take a giant leap towards fostering a sustainable blue economy and building a robust capital market in our country," SEC chairperson Emilio Aquino said during the launch of the guidelines.

"Blue bonds, as a specialized class of debt securities, are emerging as a powerful tool globally to promote environmental sustainability, not only in the corporate sector but also at the sovereign level. These bonds provide a unique opportunity to channel investments into projects that support marine conservation, sustainable fisheries and responsible aquaculture," he added.

ADB finance sector director Xiaoqin Fan expressed support for the promotion of blue bonds, noting that the ADB's objectives are "strongly aligned" with the aspirations of the SEC.

Confidence booster

"These guidelines will boost investors' confidence by fostering transparency and systemization…ADB is delighted to support this important step in partnership with the SEC and the British government," Fan said.

The issuance of blue bonds in the country is governed by SEC Memorandum Circular 15, Series of 2023, or MC 15, providing Guidelines on Eligible Blue Projects and Activities for the Issuance of Blue Bonds in the Philippines, released last September.

Several issuers have since expressed their interest to take advantage of the new investment product.