Government eyes first $500 million green bond issue

MANILA, Philippines — The Philippines is borrowing $500 million via the first-ever issuance of green bonds in the offshore debt market in line with efforts to finance sustainable projects.

Finance Secretary Carlos Dominguez III said the government is set to offer green bonds for the first time, the schedule of which has yet to be identified as finance officials wait for market conditions to improve.

Dominguez confirmed last year that the country intends to make its maiden auction of green bonds in an effort to maximize public and private funds in completing net-zero infrastructure.

“In the immediate future, we are looking at issuing $500 million in green bonds. We are waiting to see favorable market conditions for that,” Dominguez said in a TV interview.

At the 26th Conference of the Parties, Dominguez said the government has to work with the private sector on the use of grants, investments and subsidies to minimize the impact of climate adversities. One of the financial instruments that he pitched was the issuance of green bonds.

In January, the government approved the Sustainable Finance Framework, listing ways to raise funds through green, social and sustainable bonds, loans and similar debt instruments.

The framework requires the government to deploy proceeds from sustainable finance to eligible projects that promote environmental protection and social intervention.

On the other hand, it prohibited the use of sustainable finance to complete projects on extractive mining, fossil fuel production and other controversial business activities.

As the Philippines enters yet another debt option, Dominguez said the government will pursue efforts to keep the debt ratio within manageable levels. He added that the economic team sees the debt stock moderating within this year and the next.

The national debt ballooned by nearly a fifth to P11.73 trillion in 2021, from P9.8 trillion in 2020, as the government recorded double-digit increases in both domestic and external obligations. In turn, the debt pile, when measured against the gross domestic product (GDP), swelled to 60.5 percent, from 54.6 percent.

The international community observes the debt-to-GDP standard of 60 percent in the Eurozone. Breaching that threshold may alarm credit monitors and multilateral lenders on the capacity to pay of an economy.

Moving forward, the government plans to weather its borrowings to P2.47 trillion this year, from a program of P3.07 trillion in 2021, in an effort to slow the growth in the outstanding debt.