DBP eyes peso bond issue late next year

THE DEVELOPMENT BANK of the Philippines (DBP) is planning to tap the domestic bond market again in the second half of 2026 to raise fresh funds for its lending activities.

“We have some maturities, but the idea is to get fresh funds,” DBP Executive Vice-President and Treasury & Corporate Finance Sector Head Carel D. Halog told reporters on Thursday. “The procurement process alone takes around six months… It might spill over into the third quarter. That’s the most realistic scenario.”

The bank wants to borrow P10 billion to P50 billion and issue a bond with a medium-term tenor, possibly with a five-year duration, depending on market demand, he said.

“As a borrower, of course you want to extend your duration and lock in your rates while it’s still low… As an investor, you don’t want to lock in. So, it’s a balance between supply and demand.”

The notes will be issued out of DBP’s expanded P150-billion program, he added.

He said a sustainability-themed issuance is unlikely as there are extra costs for certifying the bonds.

“There are extra procedures for sustainability and extra cost for us. So, we want to make it cost-efficient. We will just do a straightforward bond.”

DBP last tapped the domestic bond market in July, raising P8.25 billion in fresh funds from its second dual-tenor bond offering for the year.

GROWTH
Meanwhile, DBP expects Philippine gross domestic product (GDP) growth of 4% to 5% next year amid an expected recovery in sentiment that was hit by the corruption scandal and with the Bangko Sentral ng Pilipinas (BSP) seen cutting rates further to support domestic demand. This is below the government’s 6-7% growth target.

“We are cautiously optimistic. At least for DBP, our outlook is good. But for the economy as a whole, obviously that depends on investor confidence… I think the government is doing everything they can to restore that confidence,” DBP President and Chief Executive Officer Michael O. de Jesus said.

This, even as he said that they expect the bank’s net income to decline by P1 billion to P2 billion this year due to higher provisioning as the corruption scandal has affected repayments by contractors. He added that they see a rebound as soon as the first quarter of next year.

DBP’s net income dropped by 51.77% year on year to P2.257 billion at end-September.

Mr. Halog added that weakening economic prospects could cause the BSP to become more aggressive in its easing cycle. He said they see another 25-basis-point cut this month and two more quarter-point moves in 2026.

“They’re balancing growth and inflation,” he said.

“With GDP at 4%, you can’t afford to hike rates. And in fact, even without the rate hike, we’re looking at a GDP probably of not higher than 5%. Growth is very weak because we are a consumer-driven economy. And government spending is weak. So, consumer confidence is at the lowest. No one wants to spend. So, how can you drive the economy?”

Philippine GDP grew by 4% in the third quarter, the slowest in over four years, as the corruption mess affected public investment and household spending. This brought the nine-month average to 5%, well below the government’s 5.5-6.5% GDP growth target for the year. — A.M.C. Sy