BPI raises P21.5 billion via first issuance of COVID-19 bonds

MANILA, Philippines — Bank of the Philippine Islands (BPI) raised P21.5 billion through the first-ever COVID-19 bond offering at the domestic debt market, with proceeds aimed at helping micro, small and medium enterprises (MSMEs) recover from the pandemic.

Cezar Consing, BPI president and CEO, told participants of the virtual listing at the Philippine Dealing & Exchange Corp. (PDEx) that the amount raised was more than seven times the initial planned issue size of P3 billion.

The 1.75-year COVID Action Response (CARE) bonds carry an interest rate of 3.05 percent per annum, paid quarterly in arrear.

Consing said the main challenges faced by MSMEs include access to financing, prompting the country’s third largest private lender in terms of assets to build up its loan book for the sector two years ago.

He added the MSME sector accounts for only 10 percent of the total loan book of Philippine banks but it makes up 60 percent of total employment in the country.

“We issued the CARE bonds to address the financing needs of MSMEs, as they work to overcome the challenges brought about by COVID-19. The amount raised adds to our capability to provide financing to this very important segment of the economy,” Consing said.

The Ayala-led bank said proceeds of the fund-raising activity would be used to augment the bank’s financing and refinancing of eligible MSMEs under BPI’s sustainable funding framework.

“We hope to be able to do more of these bonds certainly in the coming years as we work our way through this crisis,” Consing said.

The overwhelming reception of investors to the fund-raising activity highlights the potential of the social bond market, which the Securities and Exchange Commission (SEC) has put forward as a funding source for projects to address the devastating impact of the global health crisis.

Last month, SEC encouraged issuers to explore the social bond market to help the country recover from the pandemic, and confirmed that the BPI CARE bonds qualify as social bonds under the ASEAN social bonds standards.

BPI has been tapping both the onshore and offshore debt markets for much needed funds. Prior to this issue, it raised P49.22 billion under its P100-billion bond and commercial paper program, including P15.32 billion via the issuance of two-year peso fixed rate bonds last January and P33.89 billion last March.

In the offshore debt market, the bank raised $300 million last year as it became the first Philippine bank to issue US dollar-denominated ASEAN green bonds. It also raised 100 million Swiss francs from its maiden ASEAN green bond issuance to bankroll green eligible projects.