DBP raises P3.87B via bond issuance

MANILA  -Development Bank of the Philippines raised P3.875 billion in fresh funds through the issuance of 1.5-year bonds, proceeds from which would be used to grow their lending activities amid rising demand from clients as well as expand the DBP’s sources of funding

DBP president and chief executive Michael de Jesus said in a statement the fresh funding would be channeled to various developmental projects and initiatives for the bank’s key priority sectors.

The state-run bank provides credit support to projects related to infrastructure and logistics; micro, small and medium enterprises; the environment; and social services and community development.

Last May, DBP said its gross loan portfolio reached P547 billion as of the end of the first quarter, an increase of 2 percent from P37 billion in the same period of 2022.

The amount raised through their latest bond offer was almost double the announced minimum issue size of P2 billion.

“Notwithstanding the volatile market backdrop, we are buoyed by the strong support from institutional investors, which allowed us to price at our tightest ever spread of 10 basis points over the relevant benchmark,” de Jesus said.

“The overwhelming reception of DBP’s issuance resulted in closing the offering period earlier than expected,” he added.

The latest BDP bonds were offered at par value with an interest rate of 6.4126 percent per year, and were enrolled and traded through the Philippine Dealing and Exchange Corp. (PDEx).

De Jesus said the distribution of the bonds was undertaken via private placement, with participation limited to Qualified Institutional Buyers, similar to what the Bank adopted in 2022.

According to Gizelle G. Santayana, head of market services at the PDS Group, in her welcome remarks, it was notable that the limitation of distribution to qualified investors did not hinder this issue from exceeding the original offer size of P2 billion, to complete DBP’s P55-billion bond program established back in 2019.

For this latest issuance, DBP tapped Standard Chartered Bank as issue manager together with China Bank Capital, as joint lead arrangers and bookrunners.

Before this, DBP issued an offshore bond that raised $ 00 million in 2021 and which Fitch Ratings rated “BBB,” as well as a domestic bond offering that fetched P12 billion through private placement in 2022.

In the January-March quarter this year, DBP reported a 17-percent jump in its net income which reached P1.23 billion from P1.05 billion in the same period last year.

De Jesus earlier said the improved bottom line was due to expanded lending activities to critical sectors of the economy, as a result of increased economic activity.