BDO Unibank jacks up tier-2 notes offer to P8B

Banco de Oro Unibank Inc. (BDO) has raised the size of its planned tier 2 notes sale to P8 billion from the original plan of P5 billion.

The notes sale is aimed at raising fresh capital that will be used to support the company’s capital base, allowing for the expansion of its loan portfolio.

In a statement on Thursday, BDO said it successfully closed its offer of unsecured subordinated notes qualifying as tier 2 capital.

Tier 2 notes are debt instruments that can help a bank improve its capital adequacy, which allows the company to lend more funds. However, tier 2 notes are given less weight than fresh equity infusions, which are considered tier 1 capital.

BDO said it closed the offer period on June 16, two days ahead of the original schedule of June 17, mainly due to oversubscription from various retail and institutional investors.

“Total orders reached close to P10 billion. As such, BDO revised its indicative issue size from P5 billion to at least P8 billion,” the company said.

The notes were priced at 6.50 percent per year and will mature in 10 years and 3 months from issue date, with a call option exercisable by the bank after five years. The issue date is set for June 27.

“This transaction is the fourth successful issuance of tier 2 notes by
BDO, meant to fund its expansion plans and enhance the bank’s capital adequacy ratio, which stood at 14 percent as of March,” the bank said.

Deutsche Bank AG, Manila branch, and HSBC acted as joint lead arrangers, joint bookrunners and selling agents for the transaction.

Multinational Investment Bancorporation was also designated as selling agent and market maker, while BDO acted as limited selling agent for the transaction.

BDO is the banking arm of the group of retail magnate Henry Sy, who runs the SM group of malls. The group also owns the country’s largest property developer, SM Development Corp.