BPI LTNCTD issue expanded to record P12.24-billion

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BANK of the Philippine Islands (BPI) listed P12.24 billion worth of long-term notes yesterday, marking the entry of the bank into the fixed income exchange.

The Ayala-controlled bank launched the offering of new long-term negotiable certificates of time deposit (LTNCTD) on Friday at the Philippine Dealing and Exchange Corp.

The issue was met with strong demand, prompting the lender to expand the initial offering of P5 billion. The P12.24-billion issuance is the single largest LTNCTD offering to date.

The notes will mature in 5.5 years and carry an interest rate of 3.75% to be paid quarterly until May 24, 2023. The issuance is the first tranche of BPI’s P30-billion LTNCTD offering approved by the central bank.

LTNCTDs are similar to regular time deposits, offering higher interest rates, but cannot be pre-terminated. Being “negotiable” means that these can be traded on the secondary market prior to maturity.

In an interview, BPI President and Chief Executive Officer (CEO) Cezar P. Consing said the long-term note was offered partly due to the lender’s intention to participate in funding the infrastructure push of the government.

“As a matter of fact we are doing this in preparation for helping fund the Build Build Build program of the government. …We are hoping that at least some of the proceeds of this go to the government infrastructure projects,” Mr. Consing said, noting that some of the funds will fund private sector projects as well.

Mr. Consing added that the fourth-biggest bank in asset terms might offer another long-term note “if the opportunity presents itself and there is a need.”

ING Bank N.V. Manila branch arranged the deal, and will also serve as selling agent together with BPI and BPI Capital Corp.

Meanwhile, PDS President and CEO Cesar B. Crisol said the company is expecting this year to surpass 2014’s listing volume of P190 billion.

“Hopefully, we can break our 2014 level of 190 billion. We have still a couple more by the end of the year. That should give us some positive results,” Mr. Crisol said, noting that about three more companies plan to issue bonds before year’s end.

BPI’s listing brings the total volume of new PDEx listings to P187.434 billion. Outstanding listed securities amount to P775.149 billion, floated by 46 companies.

Mr. Crisol added that the exchange and issuers are looking at how the US Federal Reserve acts on rates, as well as other global developments, in 2018.

“After that probably markets will digest that before coming up with firmer plans. But definitely, if infrastructure gets underway, financing requirements will result in more issuances by the market.”

Other big banks are also in the process of offering long-term paper to investors. Apart from BPI, Philippine National Bank, Security Bank Corp., Union Bank of the Philippines, and the Metropolitan Bank & Trust Co. have rolled out their own fund-raising plans through separate note offerings announced over the past few months.

On Thursday, another Ayala group company, Ayala Land Inc. listed P3.1 billion worth of short-dated notes, which will refinance maturing debt. — Karl Angelo N. Vidal