BDO sets P3-B Tier 2 notes issue

MANILA, Philippines - Banco de Oro Unibank Inc. (BDO) will issue P3 billion worth of Tier 2 unsecured subordinated notes to fund its expansion plans.

The notes will carry a tenor of 10 years and three months and will have a call option exercisable after five years. The indicative coupon rates will be based on the prevailing 10-year PDST-F benchmark and will be finalized at the end of the offer period. The prevailing rate in the secondary market is 6.32 percent.

The offer period is from Sept. 20 to 30, with the issue date set on Oct.7.

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

However, the commercial bank of the SM Group said it reserves the right to upsize the issue and adjust the timing and terms of the offer as needed.

The joint lead arrangers and selling agents are Deutsche Bank AG (Manila branch), The Hongkong and Shanghai Banking Corp. Ltd. (HSBC) and Standard Chartered Bank. Other selling agents are BDO Private Bank Inc. and Multinational Investment Bancorporation.

The issuance is BDO’s second Tier 2 capital notes offer after the P8.5-billion issue last June. The original target was to raise just P5 billion but the issue was swamped with strong demand that it ballooned to P8.5 billion.

The June debt paper issue was priced at 6.5 percent per annum, and will expire 10 years and three months from issue date, with a call option exercisable by the bank after five years. The issue date was set on June 27, 2011.