BDO issues P8.5B in tier 2 debt notes at 6.5% a year

The country’s largest bank, Banco De Oro Unibank Inc., has successfully issued P8.5 billion worth of debt notes qualifying as tier 2, or supplementary capital.

The tier 2 notes were priced at 6.5 percent a year and have a maturity of 10 years and 3 months from the June 27 issue date. BDO has the option to call or redeem the notes after five years from issue date.

“The fourth successful issuance of tier 2 notes is meant to enhance BDO’s capital base and support its medium-term growth targets,” the bank said in a disclosure to the Philippine Stock Exchange.

As earlier disclosed, BDO shortened the offer period and upsized the offering from the original issue size of P5 billion due to strong demand from retail and institutional investors.

Deutsche Bank AG (Manila branch) and The Hongkong and Shanghai Banking Corp. Ltd. acted as joint lead arrangers, joint bookrunners and selling agents for the transaction. Multinational Investment Bancorporation was also designated selling agent and market maker, while BDO acted as limited selling agent for the transaction.

The notes will pay quarterly interest and will be tax-exempt for individual investors if held for more than five years.

The debt sale comes as many banks in the Philippines and abroad seek to increase their capital adequacy ratio to serve any rise in loan demand given the improving global economy. The capital-strengthening is also aimed at meeting, if not surpassing, international standards.

BDO earlier obtained authority from banking regulators to issue P15 billion in debt notes qualifying as tier 2 over a one-year period as part of its expansion plan.

BDO was among the first local banks to sell tier 2 notes this year after the window to tap this instrument was reopened early this year with the issuance of a new framework for capital-raising by the Bangko Sentral ng Pilipinas.

BDO is controlled by tycoon Henry Sy-led SM group, which also owns the controlling stake in China Banking Corp.