Banks find safe space from virus’ clobbering

Philippine banks are harnessing long-term money from bond markets here and abroad, building up their cash hoard while interest rates are favorable amid what could be a protracted war against the new coronavirus pandemic.

Fresh from its P36-billion local bond issuance, the country’s largest lender, BDO Unibank Inc., disclosed on Monday plans to tap the offshore bond market with a benchmark-sized issuance with a tenor of 5.5 years. BDO will draw down from its existing $5-billion euro medium-term notes.In a separate disclosure, Metrobank unveiled plans to offer 5.5-year US dollar-denominated senior unsecured notes. “Proceeds will be used to refinance existing indebtedness,” it said.

“It’s just good to have diversified funding and also because the borrowing rates today for the Philippines and its corporate [issuers] are at all-time lows,” BDO Capital president Eduardo Francisco said in a text message, when asked why big local banks were scrambling to tap bond markets these days.

BDO has appointed Standard Chartered Bank as its global coordinator for the offering. Standard Chartered and BofA Securities are the joint lead managers and bookrunners.Proceeds from the offering will be used by BDO for general corporate purposes.

Metrobank has mandated UBS and First Metro Investment Corp. as joint global coordinators and bookrunners. MUFG and SMBC Nikko Capital Markets Ltd. are the joint lead managers.

Both BDO and Metrobank are rated Baa2 (with stable outlook) by Moody’s Investor Service and BBB- by Fitch Ratings. Both are investment-grade ratings.

Only last week, BDO raised P36 billion from a local bond offering with a tenor of 1.75 years and a coupon rate of 3.125 percent per annum.

In early June, Metrobank raised P10.5 billion from a local bond market foray with a tenor of 1.25 years and a coupon rate of 3 percent per annum.

For its part, Yuchengco-led Rizal Commercial Banking Corp. (RCBC) started offering two-year local bonds at an interest rate of 3.25 percent per annum. This forms part of its P100-billion bond and commercial paper program.

This will be the fifth tranche under RCBC’s bond program, drawing from the remaining unissued amount of P62.45 billion.

“The funds raised from the bonds will be utilized to support asset growth, refinance maturing liabilities, and other general funding purposes,” RCBC said.

The public offer period started on July 6 and would run until July 17, subject to adjustment.

The bonds will be listed on the Philippine Dealing and Exchange Corp. on July 27.

ING Bank NV Manila branch is the sole lead arranger and book runner. RCBC Capital Corp. is the financial advisor while the selling agents are ING and RCBC. INQ