BDO UNIBANK, Inc. has established a peso-denominated bond program of up to P100 billion to raise fresh funds.
In a regulatory filing on Monday, the Sy-led BDO said its board of directors approved during its regular meeting on Aug. 31 the establishment of a peso bond program of up to P100 billion.
“While the program has been established, there is no definite timetable yet for an issuance under the approved peso bond program,” BDO Head of Investor Relations and Corporate Planning Luis S. Reyes, Jr. said when sought for comment.
Banks can now raise fresh funds through corporate bonds with greater ease starting this month, as new rules do away with having to secure approval from the Bangko Sentral ng Pilipinas to deepen domestic capital markets.
A number of banks have been tapping the capital markets in recent months as they raised more capital ahead of tighter risk management measures that will take effect on Jan. 1, 2019 under the international Basel 3 framework.
Last week, Bank of the Philippine Islands raised $600 million through a drawdown from its $2-billion medium-term note (MTN) program to maximize flexibility in offshore funding. Security Bank Corp. announced a day after that it has set up its MTN facility amounting to $1 billion.
Currently, banks prefer issuing long-term negotiable certificates of deposit (LTNCD) to raise additional funds. However, these actually entail bigger costs compared to soliciting other forms of investments as these are actually time deposits and come with a higher reserve requirement rate.
In May, BDO raised P8.2 billion from LTNCDs to be used for liability management.
“For us, it allows us to better manage our liability mix and liability profile,” BDO Senior Vice-President Dalmacio D. Martin earlier said.
Other lenders such as Philippine Savings Bank, Robinsons Bank Corp., China Banking Corp. and East West Banking Corp. have recently issued LTNCDs to support its funding needs.
BDO shares closed at P129.80 each on Monday, down 30 centavos or 0.23%. — K.A.N. Vidal