BDO raises $600 million from offshore debt market

MANILA, Philippines — Sy-led BDO Unibank Inc. raised $600 million as it returned to the offshore debt market via the issuance of fixed rate senior notes as part of its liability management initiatives.

In a disclosure to the Philippine Stock Exchange (PSE), the country’s largest lender in terms of assets and capitalization said the fund raising activity was almost five times oversubscribed.

“The transaction was oversubscribed, with orders reaching $2.9 billion, equivalent to almost five times the offered amount,” BDO said in a statement.

The listed bank owned by the family of the late retail and banking magnate said the issue has a coupon rate of 2.125 percent per annum and a tenor of 5.5 years.

“The senior note issue is part of the bank’s liability management initiatives to tap longer term funding sources to support dollar-denominated projects,” BDO added.

The debt instrument was issued under the $5 billion Euro medium term note program (EMTN) of BDO.

Standard Chartered Bank as sole global coordinator, while Standard Chartered Bank and Bank of America Securities are serving as joint lead managers and joint bookrunners.

BDO has been tapping both the offshore and onshore debt markets to support its lending operations and general corporate purposes.

It earlier 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 has raised P111.1 billion, including P36 billion from the issuance of fixed-rate peso bonds early this month, a record P40.1 billion via the issuance of senior fixed rate bonds last Feb. 3, and P35 billion via the issuance of fixed rate bonds in February last year.

It has also raised P41.32 billion via the issuance of long-term negotiable certificates of time deposits (LTNCDs) since April 2015.

BDO beefed up its war chest versus potential soured loans, allocating a record P22.1 billion in anticipation of the expected disruptive economic impact of the novel coronavirus disease 2019 or COVID-19 pandemic.

To safeguard the bank’s balance sheet, it decided to allocate another P20 billion in upfront provisions, on top of the P2.1 billion set aside in the first quarter due to anticipated credit costs for the effects of the COVID-19 pandemic, as well as the enhanced community quarantine put in place since the middle of March until June.

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.