BPI offshore bond offering raises $300M

Ayala-led Bank of the Philippine Islands (BPI) has raised $300 million from a fresh offering of five-year offshore debt paper, the first US dollar-denominated Asean (Association of Southeast Asian Nations) green bond issued by a Philippine bank.

The bonds were priced at 99.641 with a reoffer yield of 2.577 percent. They will carry a coupon of 2.5 percent a year payable semiannually and will mature on Sept. 10, 2024, the bank disclosed to the Philippine Stock Exchange on Wednesday.

This marked the lowest coupon and yield ever paid for a US dollar-denominated bond from the Philippines and the lowest credit spread ever paid by a Philippine bank.

The offering was oversubscribed by over four times the base offer, with the order book allocated predominantly to Asia, and the rest to Europe.

By investor type, more than half of the offering was allocated to asset managers and fund managers, about one-third to banks, financial institutions and private banks, and the remainder to insurance companies, pension funds and other investors.

The transaction is expected to be settled on Sept. 10 this year.

Net proceeds will be used for the financing and/or refinancing, in whole or in part, of “green” eligible projects, as further described in BPI’s green finance framework, which focuses on projects like sustainable water and wastewater management, pollution prevention and control, and green buildings.

The Philippine Securities and Exchange Commission has confirmed that the bonds comply with the requirements under the Asean Green Bonds circular and as such are qualified to be issued under the Asean Green Bond label.

BPI Capital was the sole global coordinator for the transaction while BPI Capital, Bank of America Merrill Lynch, Citigroup, Credit Suisse, Mizuho Securities and UBS were the joint lead managers and bookrunners.

This offshore debt deal marks a drawdown from BPI’s recently updated $2-billion medium-term notes (MTN) program.

Under an MTN program, an issuer can generate constant cash flows from debt issuance, typically with tenors of five to 10 years. This will allow this issuer to tailor its borrowing to meet its financing needs. These securities can be continuously offered by a company to investors through a dealer, with investors being able to choose from differing maturities.

BPI recently bagged from global credit watchdog Standard & Poor’s a credit grade that is at par with the Philippine government’s all-time investment grade rating of BBB+, just one a notch away from A territory rating. This was the first credit rating assigned by S&P to BPI, making it the first private domestic bank in the Philippines to achieve investment grade ratings of BBB+ in both issuer credit rating and stand-alone credit profile.