LAND BANK of the Philippines (LANDBANK) is targeting to raise over P20 billion through an offering of sustainability bonds that it could launch in the fourth quarter.
“We’re planning to go to the market. We’re just timing [it and] making sure that we issue within the right window… It will be market-driven, but we do have approvals for a pretty sizeable amount. But certainly, it will be more than P20 billion,” LANDBANK President and Chief Executive Officer Lynette V. Ortiz told reporters on the sidelines of an event on Tuesday.
The upcoming issuance will be branded as “Asenso bonds,” building on the bank’s AGRISENSO lending program, she said. Proceeds will fund projects in the agriculture, sustainability, environment, and social sectors.
The bonds are expected to have a tenor between one and five years, which Ms. Ortiz sees as the “sweet spot” in terms of investor interest, as seen in previous issuances.
“We’re still determining if we’re going to go with one tranche or two,” she added.
She said being part of the positive watchlist of JPMorgan Chase & Co.’s emerging market government bond index will bode well for foreign participation in the Philippines’ capital markets and bond issuances.
JPMorgan this month said that Philippine peso-denominated government bonds have been tagged as “Index Watch Positive,” which is final review phase for inclusion in its Government Bond Index for Emerging Markets (GBI-EM) series.
The Philippines would have a weight of about 1% of the GBI-EM Global Diversified Index if included, according to JPMorgan.
National Treasurer Sharon P. Almanza said the country may see an additional P100 billion in foreign inflows once it reenters the index. The Philippines’ global peso notes were removed from the GBI-EM in January last year due to illiquidity.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said LANDBANK’s planned bond issue will likely attract both domestic and foreign investors amid growing interest in environmental, social, and governance (ESG) issuances.
Current yield levels also remain attractive for investors as they are still relatively high compared to rates seen in recent years, he said.
“The Philippine bond market could also benefit from possible inclusion in the JPMorgan global emerging market bond index, so timing and market conditions are favorable for new bond issuances,” Mr. Ricafort added.
LANDBANK booked a net income of P25.23 billion in the first semester, rising from P20.7 billion in the same period last year, based on its latest financial statement posted on its website. — Aubrey Rose A. Inosante
