DBP eyes over P30 billion from bond sale in Q4

MANILA, Philippines — State-run Development Bank of the Philippines plans to raise over P30 billion from a bond issuance in the fourth quarter of the year.

DBP president and CEO Michael de Jesus said the bank would return to the debt market toward the end of the year as part of its fundraising activities.

“We haven’t decided yet whether it’s going to be plain vanilla or tier 2. It’s peso-denominated because our natural use of proceeds is peso loans,” De Jesus told reporters.

De Jesus said the approved fundraising for the year is around P45 billion.

An initial P8.75 billion has already been raised in February, which leaves the bank with about P36.25 billion that can still be borrowed.

“We tend to issue the balance (by yearend) depending on market conditions,” De Jesus said.

He added that proceeds of the bonds, which will likely be a shorter tenor of five years, will be used for DBP’s loan programs.

A few months ago, DBP completed its Series 5 bond issuance, which was oversubscribed by more than four times.

The bonds were offered at par value with an interest rate of 6.102 percent per annum.

Apart from expanding DBP’s loan portfolio, proceeds would also be used to finance general corporate requirements, including funding source diversification and balance sheet expansion.

Meanwhile, DBP is hoping that amendments to its charter will be passed within the year as part of its moves to cater to the ever-changing market and economic landscape.

“These (changes) have to be done right now. If not, we have to start from scratch if we do it again next year with the new set of congressmen and all that,” De Jesus said.

The Department of Finance (DOF) has already submitted proposed changes in the DBP’s charter, as well as that of the Land Bank of the Philippines.

Among key amendments to the DBP’s charter is the increase in its authorized capital stock to P300 billion, an over 700-percent increase from the current level of P35 billion.

Also included is the higher public ownership of up to 20 to 30 percent to encourage the private sector to contribute to the capital buildup of the bank and provide it with more flexibility.

Amending DBP’s charter would also allow the bank to be listed on the Philippine Stock Exchange as early as next year.

DBP’s charter was last amended in 1998, which raised the bank’s authorized capital stock to P35 billion from P5 billion.

DBP is the eighth largest bank in the country in terms of assets. It provides credit support to four strategic sectors of the economy namely, infrastructure and logistics;  MSME; environment and social services and community development.