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BdO raises $600M more via fixed notes

AJ Bajo

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Sy group’s universal bank BdO Unibank Inc. secured $600 million (approximately P30 billion) in fresh funds through the issuance of fixed-rate senior notes which is part of its medium-term borrowing program.

In a report to the stock exchange, the country’s top lender said the oversubscribed offer fetched orders amounting to $2.9 billion, nearly five times the base offer.

BdO said the notes offer is part of its liability management initiatives “to tap longer- term funding sources to support dollar-denominated projects.”

2.125% a year rate

The notes carry a coupon rate of 2.125 percent per annum and a tenor of five and a half years, and were rated Baa2 by Moody’s Investors Service.

The bank tapped Standard Chartered Bank as sole global coordinator for the issuance, while Standard Chartered Bank and Merrill Lynch (Singapore) Pte. Ltd. acted as joint bookrunners and joint lead managers.

Prior to this fund-raising, BdO also raised P36 billion from the issuance of fixed-rate bonds in the local market, more than seven times the original offer of P5 billion on the back of demand from individual and institutional investors.

Diversification funded

Proceeds from the bonds will be used by the bank to diversify its funding sources and support lending activities.

As of end-March 2020, BdO registered 10 percent lower net earnings in the first three months of the year, to P8.8 billion from P9.8 billion in the same period last year.

This came as its investment portfolio took a hit impact from weak capital market conditions amid the COVID-19 pandemic, while core lending and deposit-taking activities still sustained growth.

BdO allocated an additional P20 billion in loan loss provisions for this year, on top of its P2.1 billion provision in the first quarter as it expects the pandemic to bring in economic disruptions which may result in a rise in delinquencies.

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