BDO to redeem P10-B notes

MANILA, Philippines - BDO Unibank Inc. the main banking arm of the SM Group, will exercise its option to redeem P10 billion worth of notes.

In a disclosure to the Philippine Stock Exchange BDO said it will redeem its P10-billion unsecured subordinated notes eligible as Tier 2 Capital due 2017, on Nov. 21, 2012.”

The Series 1 notes were issued on Nov. 21, 2007.

“On the optional redemption date, all the Series 1 notes issued by BDO shall be redeemed in whole for cash at a redemption price equal to the face value of the Series 1 notes, plus accrued interest covering the accrued and unpaid interest as of but excluding Nov. 21, 2012,” it said.

The retirement of the Tier 2 notes, BDO said, will reduce its cost of funding as well as improve its capital structure in favor or higher quality core Tier 1 capital.

Recently, BDO raised P43.5 billion (equivalent to over $1 billion) in core capital through a 1:3 rights offer last July 4 to support its medium-term growth objectives and meet the Basel III capital requirements ahead of schedule. Basel III is a global regulatory standard on bank capital adequacy, stress testing and market liquidity risk.

BDO earlier said part of the proceeds from the additional capital will be utilized by the bank to exercise the early redemption option of its Tier 2 debt.