World Bank-IFC invests $ 150 million in UnionBank’s first social bond
International Finance Corp. (IFC), a member of the World Bank Group, invests more than one hundred million dollars in the first social bond of the Union Bank of the Philippines led by Aboitiz to finance micro, small and medium enterprises affected by COVID- 19 (MSME).
In a statement released Friday, IFC said it would invest $ 150 million in a seven-year social bond to be issued by UnionBank, the country’s seventh largest private sector bank.
The bond, which will be issued under UnionBank’s new sustainable funding framework, will be the lender’s first social bond led by Aboitiz and its longer-term bond denominated in US dollars to date.
It is also the second social link of its kind in the Philippines.
Tens of thousands of jobs are expected to be created over the next seven years thanks to the new social bond, according to IFC.
He said the proceeds from the bond are expected to fund more than 2,000 loans to MSMEs, which have been affected by the pandemic.
IFC said its investment will also help UnionBank increase funding for MSMEs through its supply chain finance platform, made possible by digital technologies.
“Our goal in issuing this bond is to support the recovery of MSMEs after the COVID-19 pandemic,” said Jose Emmanuel Hilado, CFO of UnionBank.
âWe are confident that we can achieve this through the use of IFC’s long-term financing and by leveraging our supply chain financial platform. This could not have come at a better time, as this market segment has been particularly affected by the current crisis, âsaid Hilado.
MSMEs represent more than 90% of enterprises in the country. The sector also accounts for over 60% of pre-pandemic jobs, but loans to MSMEs only accounted for 6% of total bank lending in the country.
This makes increased access to MSME finance essential to foster a resilient and inclusive recovery, according to the IFC.
“In the aftermath of the COVID-19 crisis, the use of social bonds to generate finance to meet the needs of vulnerable and underserved people, including small businesses, will be essential to help stimulate recovery.” , said Alfonso Garcia Mora, vice president of Asia and the Pacific at IFC.
“This landmark agreement marks IFC’s first COVID-19 response social bond investment in Asia and will help create jobs, strengthen and deepen the country’s capital markets, and help develop a more resilient, efficient and inclusive financial sector, âsaid Mora.
IFC said the issuance may also pave the way for the opening of the social bond market in the Philippines, replicating the success of opening up the country’s green bond market and deepening capital markets. for thematic bonds.
The bond complies with the International Capital Markets Association (ICMA) Social Bond Principles and ASEAN Social Bond Standards, as confirmed by a second party opinion provided by the environmental research and rating firm , social and corporate governance (ESG) Sustainalytics, he said. .
At the end of fiscal 2020, IFC reported having issued 53 social bonds on the public and private markets in 11 different currencies.
In addition, he said that since 2017, his social bonds have supported 153 eligible projects totaling $ 4.3 billion, reaching 2.6 million farmers, feeding three million people and treating 1.6 million malnourished children. . âLBG, GMA News