Investors swarm BPI’s P25-billion bonds

MANILA, Philippines — Ayala-led Bank of the Philippine Islands (BPI) raised P25 billion as retail and institutional investors swarmed its inaugural peso fixed rate bond issue, prompting the listed bank to upsize and cut short the offer period of the fund raising activity.

BPI president and CEO Cezar Consing said the 167-year old bank is very pleased by the investors’ strong response to the peso bond offering.

“This follows the success of our debut dollar bond offering earlier this year. We are grateful that investors recognize our strong credit metrics and we are happy to meet their needs for innovative fixed income products,” he said.

Due to the strong response from both retail and institutional investors, BPI has decided to close the offer period one day ahead of schedule. The fund raising activity is part of the bank’s P50 billion bond and commercial paper program.

“This decision was based not only on the consolidated order book having reached over P38 billion, but also on having achieved this at the tightest end of the pricing range,” BPI said in a statement.

This prompted BPI to implement a five-fold increase in the issue size of the fixed rate bonds from the initial guidance of P5 billion. The bonds would be issued and listed on Philippine Dealing & Exchange Corp. (PDEx) on Dec. 6.

The fixed rate bonds due March 2020 would pay a coupon of 6.7970 percent per annum, payable quarterly, representing a spread of 20 basis points over the interpolated 1.25 year Bloomberg Valuation service (BVAL) government benchmark rate.

The yield is at the tight end of the spread range of 20 to 40 basis points communicated to institutional investors during the institutional bookbuilding period.

The offering supports BPI’s growth objectives and expansion plans while diversifying its funding sources, while addressing clients’ need for new investments with shorter tenors compared to long-term negotiable certificates of deposits.