BDO sets P5-billion subordinated notes issue for Tier 2 capital

MANILA, Philippines -  Industry leader Banco De Oro Unibank Inc. (BDO) will issue P5-billion worth of subordinated notes qualifying as Tier 2 capital to fund its expansion plans and enhance its capital adequacy ratio (CAR).

The notes will have a maturity of 10 years and three months from issue date, with a call option exercisable by the bank after five years.

The indicative interest rate for the notes will be based on the 10-year PDST-F benchmark, and will be finalized at the end of the two-week offer period.

Interest will be paid quarterly and will be tax exempt for individual investors if held for more than five years.

The offering period is from June 6 to 17, with the issue date tentatively set for June 27. BDO reserves the right to adjust the timing and terms of the offer as needed. 

Deutsche Bank AG, Manila branch and The Hongkong and Shanghai Banking Corp. Ltd. (HSBC) are joint lead arrangers and selling agents. Multinational Investment Bancorpo. (MIB) was also designated as selling agent while BDO, BDO Private

 Bank and BDO Capital will act as limited selling agents for the transaction.

Earlier, BDO raised $250 million last year to build a buffer for anticipated Basel II and 2.5 capital requirements. Of the total amount, $150 million came from the sale of shares to the International Finance Corp. (IFC) and the IFC Capitalization Fund, a joint effort of the Japan International Cooperation Agency (JICA) and the IFC. The other $100 million came from Asian institutional investors.

The universal bank of the SM Group of Companies needs funds for the impending acquisition of Export and Industry Bank (EIB), which has remained completely unresolved.

Tan said that despite the approved by the Philippine Deposit Insurance Corp. (PDIC), there were still “details” needed to be included in the sale package.

“In the case of EIB, its not a question of ‘if’ but on the final outlook of the balance sheet,” he said.

Lasr week, BDO said it was projecting a net income of P10.5 billion for 2011, 19-percent higher than the P8.8 billion recorded in 2010.

The budgeted income would be the first time the commercial bank of the SM Group of Companies would breach the P10-billion level in terms of net income, and the second bank after Bank of the Philippines Island (BPI) achieved the historical feat last year.