BDO raising up to P100 B from domestic bond issue

MANILA, Philippines — Sy-led BDO Unibank Inc. is raising as much as P100 billion by tapping the onshore debt market after the Bangko Sentral ng Pilipinas (BSP) provided banks with an alternative source of funding.

In a disclosure to the Philippine Stock Exchange (PSE), the country’s largest lender said its board of directors approved the establishment of a peso bond program during its meeting last Aug. 31.

BDO head of investor relations and corporate planning Luis Reyes said in a text message the bank has yet to finalize the terms of the proposed peso bond program.

“While the program has been established, there is no definite timetable yet for an issuance under the approved peso bond program,” he said.

Last May, the listed bank owned by retail and banking magnate Henry Sy raised P8.2 billion from the issuance of long-term negotiable certificates of time deposits (LTNCTDs).

The debt instrument issued by the bank has a term of five and a half years with interest rate set at 4.375 percent per annum. LTNCTDs offer higher interest rates, but could not be pre-terminated like regular time deposits.

BDO also raised P11.8 billion from the issuance of LTNCTDs in August last year to beef up its loan book to take advantage of the higher demand from borrowers amid the country’s expanding economy and at the same time lengthen the maturity of their respective debt profiles.

To date, the listed bank has raised P27.5 billion worth of LTNCTDs after issuing P7.5 billion in April 2015.

The country’s biggest bank last year raised P60 billion through a stock rights offering.

BSP Governor Nestor Espenilla Jr. had said the regulator expects banks to shift to the issuance of bonds and commercial papers instead of LTNCDs in tapping the domestic capital market.

The regulator issued Circular 1010 stating the Monetary Board through resolution No. 1225 approved the amendments to pertinent provisions of the Manual of Regulation for Banks and Manual of Regulations for Non-Bank Financial Institutions on the issuance of bonds and commercial papers.

The BSP said the enhanced rules is in line with the thrust of the BSP to promote the objectives of an orderly and efficiently functioning market for debt securities and to protect the interest of the investing public.

The issuance of bonds or commercial papers no longer needs prior BSP approval, but banks need to submit a certification of compliance with the prudential criteria and other supporting documents reflecting that the debt issuance has undergone the required process of approval by the board of directors and that it has been considered in the overall funding plan of the institution. – With Lawrence Agcaoili