MANILA, Philippines — BDO Unibank Inc. raised P36 billion after it returned to the onshore debt market via the issuance of fixed-rate peso bonds that was put on hold a few months ago due to the outbreak of coronavirus disease 2019 or COVID-19.
The country’s largest lender, owned by the family of the late retail and banking magnate Henry Sy, said the amount raised was more than seven times the original offering of P5 billion due to robust demand from individual and institutional investors.
“The latest bond issuance is part of BDO’s continuing efforts to diversify its funding sources and support its lending activities,” the bank said in a statement.
The bonds with a tenor of 1.75 years and a coupon rate of 3.125 percent per annum were exclusively offered through BDO Trust & Investments Group and BDO Private Bank Trust from Jun 15 to 26.
Standard Chartered Bank was the sole lead arranger and market maker, while BDO and BDO Private Bank Inc. were the selling agents.
Last March, BDO decided to put on hold the bond issuance after Malacañang placed Luzon under enhanced community quarantine to prevent the further spread of COVID-19.
The lockdown was relaxed June 1 with the shift of the National Capital Region (NCR) into a general community quarantine allowing the restart of the economy.
BDO raised its bond and commercial paper program to P400 billion earlier this year from only P100 billion when it was launched in August 2018.
Of the total, BDO raised P35 billion via the issuance of fixed rate bonds in February last year and a record P40.1 billion via the issuance of senior fixed rate bonds last Feb. 3.
The bank has also raised P41.32 billion via the issuance of long-term negotiable certificates of time deposits (LTNCDs) since April 2015.
BDO earlier boosted its war chest against potential bad loans, allocating a record P22.3 billion in anticipation of a more disruptive COVID-19 pandemic.
The bank allocated another P20 billion in upfront provisions last June on top of the P2.3 billion set in the first quarter to safeguard the bank’s balance sheet.
It expects delinquencies to increase this year with the disruption in business activities, tightness in corporate liquidity, lower consumption levels, and contraction in gross domestic product by two to 3.4 percent based on the estimate of the Development Budget Coordination Committee.
The bank said it expects actual write-offs or losses to be much less despite the expected rise in its non-performing loan ratio.
BDO’s net income declined by 10.2 percent to P8.8 billion in the first quarter of the year from P9.8 billion in the same quarter last year as provisions surged 77 percent to P2.3 billion from P1.3 billion.
Despite the additional provisions, BDO’s capital base stood at P373.2 billion with a CAR of 13.8 percent and common equity Tier 1 ratio of 12.7 percent in end March, both above the levels set by the Bangko Sentral ng Pilipinas and enough to withstand near-term shocks.