Banco de Oro issues $100M in unsecured notes

The Banco de Oro Universal Bank (BdO) issued yesterday a $100-million (roughly P5.3- billion) worth of senior unsecured notes in the international financial market.

BdO officials said the issuance would allow the bank to diversify its funding sources for corporate and expansion programs.

"The bank is creating a balanced mix of long, medium and short term funding," BdO corporate communications head Elmer Serrano said yesterday. " The proceeds will be used for general corporate purposes," he added.

Recently, the bank has acquired high-end financial institution Banco Santander Philippines Inc. (BSPI) for P2.56 billion as well as the brokerage arm of the Santander Group known as SISPI for P28.4 million.

The commercial banking institution of the Group also executed a $20-million convertible loan agreement with the World Bank’s investment arm, International Finance Corp. (IFC).

The agreement has a five-year term convertible into BdO’s common shares starting from the third year of the disbursement. By the fifth year, the IFC would then be a considerable equity partner of the Henry Sy-controlled expanded commercial bank.

The $20-million convertible loan will be used by the BdO for Tier 2 capital buildup.

Recently, the bank also undertook a three-year risk sharing facility worth $62.5 million to enable the bank to extend risk-free medium and long-term loans.

Under the agreement signed with the IFC, the World Bank subsidiary would partially share the credit risk of selected new loans originated by the BdO.

However, the maximum risk for the IFC will only be as high as its equity exposure to the bank.

Last year, BdO acquired the banking operations of medium-sized commercial bank First e-Bank.