Sunday, July 14, 2024

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The Securities and Exchange Commission predicts an increase in popularity for blue bond offerings.


According to a commissioner from the Securities and Exchange Commission (SEC), there is potential for an increase in blue bond issuances in the Philippines and other Southeast Asian countries. This projection was shared on Monday.

The Philippines has approximately $10 billion in green, social, and sustainability (GSS) bond issuances since 2018. In an interview with the television show Market Edge, SEC Commissioner Kelvin Lester K. Lee stated that the country has been performing well in this area.

Per Mr. Lee, global blue bond deals have reached a total of $5 billion between 2018 and 2022.

Mr. Lee stated that the Philippines is the second highest issuer of GSS bonds, including blue bonds, in the ASEAN region. He predicts further growth and anticipates progress not only in the Philippines but also in other ASEAN countries.

On September 21st, the Securities and Exchange Commission released a memorandum circular, number 15, outlining the criteria for qualifying blue projects and activities in the Philippines that can be used for issuing blue bonds.

The memo stated that any projects or activities funded by blue bond sales must align with the United Nations’ Sustainable Development Goals 6 and/or 14. These goals aim to guarantee access to clean water and sanitation, as well as to protect and responsibly use marine resources for sustainable development.   

The directive stipulated that funds raised from blue bonds must be solely allocated towards supporting or refinancing initiatives that specifically aim to promote sustainable water management and protect the ocean. These initiatives encompass the management of ecosystems, sustainable management of fisheries, and sustainable aquaculture.   

In the meantime, Mr. Lee announced that the SEC is preparing to launch a preliminary sukuk bond framework for private companies by the end of this year or early next year.

Mr. Lee stated that they are considering a draft to be released to the public either this year or in the beginning of next year in order to promote the issuance of sukuk bonds.

When asked for additional input, Mr. Lee responded via his mobile phone that the preliminary plan is currently being developed by the SEC with aid and guidance from the Asian Development Bank.

According to Mr. Lee, the sukuk bonds framework will oversee sukuk bond issuances in the private sector in the Philippines.

In a recent statement, National Treasurer Rosalia V. De Leon announced that the government aims to release sukuk bonds, which are also referred to as Islamic bonds, by the end of this year or in the first quarter of next year. This marks the country’s first entry into the Islamic bond market, as a means of addressing its budget deficit.

In July, Benjamin E. Diokno, the Finance Secretary, announced that the government’s goal was to generate $1 billion through the sukuk bond deal.

“I am confident that the upcoming sukuk bond to be issued by the government will be a success. We aim to utilize it as a catalyst for the implementation of our next batch of sukuk bond framework for the private sector,” stated Mr. Lee.