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BDO raises P35 billion from fixed-rate peso bonds

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BDO UNIBANK, Inc. raised P35 billion from the issuance of fixed-rate peso bonds, which will be used to expand its business.

The Sy-led bank listed the bonds, which will mature in a year and a half, at the Philippine Dealing System (PDS) in Makati City on Monday. The bonds carry an interest rate of 6.42% to be paid quarterly until August 2020.

The coupon rate also represented a 25-basis-point spread over the Bloomberg PHP Valuation Service benchmark.

The offering, which is the largest peso bond issuance by a local bank to date, marks the first tranche of BDO’s P100-billion bond program announced in August.

In an interview, BDO Treasurer and Executive Vice-President Dalmacio D. Martin said that the funds raised will be used for the bank’s general business uses and expansion.

“Given the feature that it only attracts 6% reserves, the effective cost is lower for this bond. We intend to pay off or let roll off our expensive liabilities. This will be used partially for that,” Mr. Martin told BusinessWorld yesterday.




Sought for comments on when will the bank issue the next tranche, Mr. Martin said that the bank will be “opportunistic” and look for the best possible time.

“[It will be] depending also on the way the business unfolds for the rest of the year,” he added.

Local banks can now raise fresh funds through corporate bonds with greater ease as new rules no longer require them to secure central bank approval.

Metropolitan Bank & Trust Co., Bank of the Philippine Islands, as well as UnionBank of the Philippines, Inc. have recently issued peso-denominated instruments to diversify funding sources and expand their businesses.

Meanwhile, Rizal Commercial Banking Corp. recently raised P15 billion worth of green bonds to support climate and environmental projects.

Standard Chartered Bank served as the sole arranger and bookrunner of the offer. Meanwhile, BDO, BDO Private Bank, Inc. and BDO Capital & Investment Corp. acted as selling agents.

BDO’s listing brings the total volume of outstanding listed securities to P1.099 trillion, floated by 50 companies.

In May last year, BDO raised P8.2 billion via 5.5-year long-term negotiable certificates of time deposit to be used for liability management. — Karl Angelo N. Vidal