BDO sets early redemption of P10.3-B notes

MANILA, Philippines -  BDO Unibank Inc., the main banking arm of retail tycoon Henry Sy Sr., will exercise its option to redeem some P10 billion worth of unsecured subordinated notes next month to further strengthen its capital base, a disclosure to the Philippine Stock Exchange (PSE) said.

BDO informed the PSE that it is now seeking the approval of the banking sector regulator of its planned early notes redemption.

“Upon prior approval of the Bangko Sentral ng Pilipinas, BDO will, on May 31, 2013 exercise its option to redeem its P10-billion unsecured subordinated notes eligible as Tier 2 capital due 2018, callable with step-up in 2013,” it said.

BDO corporate information officer Elmer Serrano said the bank issued the Series 2 notes on May 30, 2008.

In November last year, BDO also redeemed some P10 billion worth of notes ahead of its maturity date.

Aside from being able to improve its capital structure, BDO said the early redemption of the notes would also help the bank reduce its cost of funding.

Also last year, BDO raised P43.5 billion (equivalent to over $1 billion) in core capital through a 1:3 rights offer 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 issue will be utilized to exercise its early redemption option of its Tier 2 debt issue.

The biggest bank in terms of resources, BDO also has one of the largest distribution networks, with more than 740 operating branches and over 1,700 ATMs, nationwide.