BANK OF THE Philippine Islands (BPI) has priced its peso-denominated bond offer worth P25 billion, which will support its expansion plans and diversify funding sources.
In a regulatory filing Tuesday, the Ayala-led BPI said it raised P25 billion from the peso-denominated bond offer, higher than the initial guidance of P5 billion and the P15 billion announced last Oct. 17.
The fixed-rate notes carry a coupon of 6.797% per annum to be paid quarterly until March 2020, as they will mature in 1.25 years.
“The coupon represents a spread of 20 bps (basis points) over the interpolated 1.25 year [PHP Bloomberg Valuation Service] government benchmark rate, and is at the tight end of the spread range of 20 to 40 bps communicated to institutional investors during the institutional bookbuilding period,” the bank said in a statement.
The bonds will be issued and listed on the Philippine Dealing & Exchange Corp. on Dec. 6.
The offering marks the first tranche of the bank’s P50-billion bond and commercial paper program.
BPI said it decided to close the offer period on Nov. 19 — a day ahead of schedule — as the order book reached P38 billion while achieving at the tightest end on the pricing range.
Proceeds from the fund-raising activity will be used to support the bank’s growth objectives and expansion plans while diversifying its funding sources, it said.
This will also “address clients’ need for new investments with shorter tenors compared with the long-term negotiable certificates of deposits,” BPI said in the statement.
“We are very pleased by the strong response to our peso bond offering,” BPI President and Chief Executive Officer Cezar P. Consing was quoted as saying in the statement. “We are grateful that investors recognize our strong credit metrics and we are happy to meet their needs for innovative fixed income products.”
Lenders can now raise fresh funds through corporate bonds with greater ease as new rules do away with having to secure approval from the Bangko Sentral ng Pilipinas.
Metropolitan Bank & Trust Co. recently raised P10 billion via fixed-rate bonds, part of its P100-billion bond and commercial paper program announced last month. This was the first ever bond issue by a bank since the central bank liberalized rules on lenders’ fund-raising activities.
In May, BPI completed a P50-billion rights offer, with the proceeds funding its business operations and expansion.
The bank also raised $600 million in August through a drawdown from its $2-billion medium-term note program, which it said was the largest issuance by a local lender in the offshore debt market.
The Ayala-led bank reported a P5.98-billion net profit in the third quarter on the back of the double-digit expansion of its net interest income.
BPI shares gained P1.80 or 2.03% to close at P90.50 apiece on Tuesday. — K.A.N. Vidal