MANILA – Strong uptake on the Bank of the Philippine Islands’ (BPI) Covid Action Response Bond (CARE Bonds) will allow the Ayala-owned financial institution to further increase its lending to the micro, small and medium enterprises (MSMEs).
The bank initially offered the 1.75-year debt paper for PHP3 billion but subscriptions reached PHP21.5 billion. Interest rate is at 3.05 percent per annum.
In his speech during the virtual listing ceremony at the Philippine Dealing & Exchange Corporation (PDEx) for the PHP21.5-billion bond, BPI president and chief executive officer (CEO) Cezar Consing said proceeds of debt issuance will support the MSME sector, which faces additional challenges because of the pandemic.
He said the sector accounts for about 10 percent of all loans in the financial system even though they employ about 60 percent of employment in the country.
“The size of this bond offering is very large relative to our own MSME book, which we actually began to build only about two year ago,” he said, adding this is an aspiration for the bank to issue similar bonds in the future.
In a statement, the BPI said proceeds of the bond issuance will be used to finance and refinance eligible MSMEs under the bank’s Sustainable Funding Framework.
During the same event, PDEx president and chief operating officer Antonio Nakpil said BPI’s CARE Bonds is the country’s first social bond that is compliant with the standards of the Securities and Exchange Commission (SEC) and the Asean bonds standards, and is the second social bond issued in Asean.
He said the volume of this issuance cannot be considered as a test amount, and was achieved even while other private sector issuers as well as the government are also doing their own capital raising activities with a combined amount of nearly PHP500 billion.
“The liquidity of investors was not conjured up by magic and it’s directly attributable to deliberate, mindful macroprudential actions of the Bangko Sentral ng Pilipinas in anticipation of the effects on the economy brought on by the public health crisis,” he said.
Nakpil said while the central bank’s actions such as the temporary exclusion of market makers position from single borrowers’ limits (SBL) is not intended solely for the fixed income market, the latter benefited through direct and definite support on market liquidity for corporate bonds. (PNA)
