MANILA -- A ranking Development Bank of the Philippines’ (DBP) official is optimistic about a strong uptick for the bank’s PHP5-billion, 2-year sustainability bond as more people realize the value of investing for nation-building.
Offer period will be from October 21-30, 2019 and issuance is targeted to be on November 11, 2019.
Pricing guidance was initially set at 4.25 percent per annum and targeted to be finalized by October 18.
DBP First Vice President and head of Corporate Finance Group Francis Nicolas M. Chua, in an interview after the institutional investors briefing Monday, said sustainability bonds are not simple corporate paper since its proceeds will be used for specific infrastructure projects.
He explained that its issuance is in line with the bank’s sustainability framework, which extends loans to projects that support the environment and economic expansion.
Among the projects for financing under this framework are renewable energy and energy sufficiency-related infrastructure as well as the construction of hospitals and schools by both the government and the private sector.
Chua said they have received positive feedback from the institutional investors and indicated a willingness to upsize the issuance if needed.
“We can also do a follow-up but it depends on the need of the bank because as mentioned earlier we have to make sure that the proceeds will be used for the projects,” he said, pointing out that “we have to also identify projects in the pipeline so that we can allocate the funds.”
“We have to also identify projects in the pipeline so that we can allocate the funds,” he added.
The DBP official said primary risk to the issuance to date is rate volatility but stressed that issuing the debt paper by next month is way better than doing it six months back.
This, since the Bangko Sentral ng Pilipinas (BSP) has slashed its key policy rates by about 75 basis points to date as domestic inflation continues to decelerate and domestic growth, despite a slip in the first half of the year, is seen to recover in the second half and hit the government’s 6-7 percent growth.
Chua also noted that while the domestic appetite for sustainability bonds remains low in the domestic market compared overseas it “is still evolving.”
“But we’re hoping that the more we come up with these kinds of bonds the more the market and the population gets informed about it and can make informed decisions,” he said.
“Right now, there’s no difference in pricing so it’s really a preference of investors,” he added. (PNA)
