BDO to establish $2B euro note program


Posted at Aug 06 2012 10:09 AM | Updated as of Aug 06 2012 06:10 PM

MANILA, Philippines - BDO Unibank, the country's largest bank in terms of assets, is establishing a  $2 billion euro medium term note (EMTN) program in order to tap funding for infrastructure lending.

The Henry Sy-led bank is also planning to retire P10 billion of Tier 2 debt by November 2012.

In a statement, BDO said these moves are part of its liability management initiatives to tap longer-term funding sources and lower funding costs.

"Setting up the EMTN program is a preparatory move on the part of BDO as this will enhance the bank’s ability to access longer-term funding for relending to projects like infrastructure under the government’s Public-Private Partnership program," BDO said.

BDO will also exercise the early redemption option on its Series 1 Tier 2 notes by November 21, 2012. 

BDO recently had a landmark $1 billion stock rights offer, and part of its proceeds were earmarked for the redemption of these higher-cost notes, which carry a coupon rate of 7%.

"The retirement of these notes will reduce the bank’s cost of funding as well as improve its capital structure in favor or higher quality core Tier 1 capital," the bank said.