BDO notes offering likely to draw investors’ interest

Banco de Oro-EPCI  Inc. expects to draw strong investors’ interest in Cebu after it offered its lower Tier 2 notes to raise an initial P5 billion to boost the bank’s consumer loan portfolio and other expansion activities.

BDO-EPCI executives led by Luis S. Reyes, senior vice president and head of Investor Relations, together with officers of the notes’ lead arranger and selling agent Hong Kong Shanghai Banking Corporation (HSBC), were here in Cebu Thursday, to introduce the bank’s latest offering to the Cebuano investors.

HSBC senior vice president for wealth management and personal financial services Patrick Cheng said a good number of Cebuanos now appreciates different investment channels including capital notes offerings.

Cheng said HSBC noted a good take up rate in Cebu in terms of offering capital notes.

With a minimum investment outlay of P500,000, this 10-year callable subordinated notes will yield at seven percent in interest annually, and is free of tax charges after five years.

The interest rate will increase to 8.5 percent if it isn’t called at the end of the fifth year. The offering period started on November 8 and will end on November 16 this year.

The issue comes amid an increase in demand for the category of lenders’ debt paper in recent weeks.

However, the bank may opt to call after five years if the interest rates will be unattractive.

Depending on the banks’ future capital requirements, BDO-EPCI may decide to upsize its issue to P10 billion, added Reyes.

“The P5 billion size is subject to over subscription. We hope to increase it to over P5 billion,” Reyes said.

This is the first time that BDO floated peso denominated notes, said Jimmy C. Yu, BDO, executive vice president and head of branch banking.

Reyes reiterated that the proceeds will be used to grow its loan base since the fixed rate funding is “appropriate for fixed rate assets”, the bulk of which is in the form of mortgages or fixed rate loans, and the rest for general corporate needs.

The bank sees its loan growth by year-end at 13 to 15 percent and is likely to maintain the same level for next year.

Since the kind of investment channel, through debt paper market is not insured with the Philippine Deposits and Insurance Corporation (PDIC), Cheng said investors will put its trust to the solid stability of the bank, back up by its strong revenue performance over the years.