Home Banking & Finance DBP sells $300 million in global bonds to refinance debt maturing this...
DBP sells $300 million in global bonds to refinance debt maturing this month
STATE-RUN DEVELOPMENT Bank of the Philippines (DBP) sold $300 million in 10-year global bonds to refinance its current obligations set to mature this month, the Department of Finance (DoF) said on Wednesday.
The DoF said in a press release that the bond refinancing offer was priced at the current rate of 10-year US Treasury notes plus 97.5 basis points (bps), lower than the previous rate of plus 225 bps when the securities were first offered in 2011. The statement cited a report from JPMorgan, which was among the joint lead managers and bookrunners of the transaction.
DBP’s debt notes were priced on March 2 following a global roadshow the day prior. The offering received strong demand, according to JPMorgan’s report.
“While investors had initially exhibited price sensitivity due to the volatility in rates, the transaction was eventually priced at T+97.5 bps to yield 2.421%, which represents a premium of approximately 32.5 bps over the implied fair value of the Philippine sovereign at the time of issuance,” the report read.
The DoF said the offering marked the first dollar-denominated bond sale in the country for the year. It was also the first Southeast Asian bank to tap the global bond market for 2021.
JPMorgan noted that the rate fetched was a “big win” for the state-run lender amid the high volatility in the financial markets and huge swings of US Treasury yields.
Credit rating Fitch Ratings last week gave an expected rating of “BBB” to the issuance, citing the bank’s “strategic policy role, full state ownership, systemic importance as the second-largest state-owned bank in the Philippines.”
The rating was at par with the “BBB” sovereign rating of the Philippines, which was affirmed by the debt watcher in May.
DBP last year raised P21 billion in two-year peso-denominated bonds at a coupon of 2.5%.
The bank’s net income went down by 26.69% year on year to P3.24 billion from January to September 2020. DBP attributed the lower profit to increased loan loss provisions amid the coronavirus pandemic. — B.M. Laforga