BDO raising $700M from offshore debt market

BDO chair Teresita Sy-Coson

The country’s largest lender BDO Unibank is raising $700 million from an offering of offshore medium term senior debt notes, marking the largest single debt issuance by a Philippine bank to date.

BDO’s notes will have a coupon of 2.950 percent per annum and will be issued at a price of 99.909 per 100, with a maturity of 5.5 years, BDO said in a press statement on Wednesday.

“The senior note issue is part of the bank’s liability management initiatives to tap longer-term funding sources to support BDO’s lending operations and general corporate purposes,” the bank disclosed to the Philippine Stock Exchange on Thursday.

The transaction was overwhelmingly oversubscribed, with orders reaching $2.2 billion, BDO said, reporting wide distribution of the notes across Asia Pacific and Europe. The settlement will be on Sept. 6, 2017.

This issuance marks the second drawdown under BDO’s $2-billion medium-term note (MTN) program set up in 2012. BDO had drawn down an initial $300 million from this program in October last year.

The MTN is type of debt program that allows an issuer like BDO to tailor its debt issuance to meet its financing needs.

The new notes to be issued by BDO were rated Baa2, the ninth highest rating in the scale of international credit watcher Moody’s. This is the same rating that Moody’s currently gives to the Philippine government.

BofA Merrill Lynch, HSBC and Wells Fargo Securities acted as joint lead managers and joint bookrunners, while Mizuho Securities and MUFG acted as co-managers for the transaction.