BDO in $1 billion rights offer, nation's largest

Reuters

Posted at May 25 2012 01:21 PM | Updated as of May 26 2012 04:11 PM

MANILA - The Philippines' largest lender, BDO Unibank Inc, plans to raise $1 billion in an equity rights offering in June to shore up its capital base, a stock exchange notice said, as the bank prepares to meet rising loan demand in a growing local economy.

The deal will be the country's largest ever rights issue, according to BDO Capital & Investment Corp, a unit of BDO which is the issue's domestic underwriter.

The stock exchange said on Friday it had approved the listing of up to 896 million common shares BDO will offer to its shareholders of record as of June 14. BDO is controlled by the country's richest man, Henry Sy.

The offer price will be fixed on June 5 and computed based on the 10 to 15 trading-day volume-weighted average price of BDO shares prior to the pricing date, subject to a discount of 20 to 25 percent, it said.

The Philippine government is targeting economic growth this year of 5 to 6 percent, compared to last year's GDP growth of 3.7 percent, on the back of rising domestic demand which has been boosted by overseas worker remittances and public spending.

Shares in BDO ended the morning session on Friday 1.2 percent higher at 62.70 pesos, outperforming the broader market, which gained 0.2 percent.

Each eligible shareholder is entitled to subscribe to one rights share for every three shares held as of the record date.

The offer runs from June 18 till June 27, with the issued shares set for listing on July 4.

FITCH AFFIRMS RATINGS

BDO has mandated Citigroup Global Markets Inc, Deutsche Bank AG (Hong Kong Branch), J.P. Morgan Securities Ltd, and United Overseas Bank Ltd as joint international lead managers and underwriters.

Fitch Ratings said on Friday it had affirmed BDO's ratings, including its 'BB' long-term foreign-currency issuer default rating, with a stable outlook.

Fitch has also assigned a 'BB' rating to the bank's $300 million bonds due 2017.

"A track record of preserving core capital and further improvements in profitability to levels comparable with those higher-rated Philippine banks could be positive for BDO's ratings," said Alfred Chan, director in Fitch's financial institutions team.