BDO raises P40-B from landmark bond issue

BDO Unibank Inc., the country’s largest lender, has raised a landmark P40 billion from a new local bond offering that set a new record as the largest bond issuance by a local bank in the domestic debt market in a single tranche.BDO’s bond float was increased by eight times the original offer of P5 billion, citing robust demand from investors.

The bonds will have a tenor of 2.5 years with a yield of 4.408 percent a year. Interest will be paid every quarter.

The one-week offer period ended on Jan. 24, 2020, with issue date set on Feb. 3, 2020.

“The bond issuance is part of BDO’s continuing efforts to diversify its funding sources and support its lending activities, and follows the P35 billion of fixed rate bonds issued in February last year,” BDO told the Philippine Stock Exchange on Wednesday.

British banking giant HSBC Ltd. was the sole lead arranger for the issue, while BDO Unibank Inc., BDO Private Bank Inc. and HSBC were the selling agents. Last year, the Bangko Sentral ng Pilipinas slashed its key overnight interest rates by a total of 75 basis points while the reserve requirement on banks was reduced by a total of 400 basis points, ensuring ample liquidity to the financial system.

Many banks are now tapping the local bond market to diversify their funding sources and reduce their reliance on volatile deposits as they provide the funding needs of the growing economy.

With assets exceeding P3 trillion, BDO is the country’s leading bank in terms of resources.

BDO grew its net profit in the first nine months of 2019 by 49.3 percent year-on-year to P32.1 billion on higher interest earnings, fee-based income and a resurgence in treasury gains. For the full 2019, BDO has targeted a record high net profit of P38.5 billion.

With a capitalization of P672.5 billion, BDO is the most valuable Philippine bank.