BDO to issue dollar notes for funding needs

BDO Unibank Inc., the country’s largest lender, is planning to sell US dollar-denominated notes, which would be issued under a previously-established medium-term debt program.

In a statement Monday, BDO said the senior notes would be used for general funding purposes and to support lending activities.

Standard Chartered Bank and UBS will act as joint lead managers for the issue, according to the bank, which is a subsidiary of taipan Henry Sy’s SM Investments Corp.

“These will represent the direct, unsecured obligations of BDO. The senior notes are expected to be sold through a book-building process to both international and local institutional investors,” BDO said.

Stable outlook

In a separate statement on Monday, Moody’s Investors Services said it had assigned a Baa2 rating on the proposed note offer. “The outlook on the ratings, where applicable, is stable.”

It said the notes would have a maturity of five years and would be listed on the Singapore Stock Exchange.

It noted the Baa2 senior unsecured debt rating was anchored on BDO’s Baa2 baseline credit assessment and its own expectation “of a very high probability of systemic support from the Philippine government.”

“However, the ratings do not receive an uplift as they are already at the same level of the sovereign rating,” Moody’s noted.

Stable operations

The following factors were considered: BDO’s domestically focused operations, prominent and growing franchise, stable asset quality and loss-absorbing buffers, sufficient capital levels that exceed the required minimum, and robust funding and liquidity profile.

BDO closed the first half of the year with a 13 percent growth in profit to P13.2 billion. This was boosted by its core businesses and a one-time gain from the consolidation of its insurance operations.

BDO noted that during the period, its loan book was up 21 percent year-on-year to P1.4 trillion.

The bank’s net interest income rose by 17 percent year-on-year to P31.7 billion as the uptick in loans was also accompanied by an expansion of its low-cost funding business.