BDO’s dol­lar notes given in­vest­ment grade rat­ing

Business World - - BANKING & FINANCE - Melissa Luz T. Lopez

DOL­LAR NOTES to be floated by BDO Uni­bank, Inc. fetched in­vest­ment grade sta­tus from Moody’s In­vestors Ser­vice, on the back of the lender’s sta­ble fund­ing pro­file as it seeks to raise fresh cap­i­tal.

In a statement, the in­ter­na­tional debt watcher gave a “Baa2” rat­ing with a “sta­ble” out­look for BDO’s dol­lar-de­nom­i­nated is­suances un­der its $2-bil­lion medi­umterm note ( MTN) pro­gram since 2012.

“The Baa2 se­nior debt rat­ing is an­chored on BDO’s baa2 base­line credit as­sess­ment and Moody’s ex­pec­ta­tion of a very high prob­a­bil­ity of sys­temic sup­port from the Philip­pine gov­ern­ment,” the credit rater said, point­ing out that

the rat­ing matched the cur­rent sta­tus held by the Philip­pines which was last af­firmed in June.

The coun­try’s big­gest bank in as­set terms un­veiled an off­shore debt pro­gram in 2012 in or­der to raise funds for cor­po­rate loans, es­pe­cially to those tak­ing on in­fra­struc­ture projects un­der the gov­ern­ment’s in­fra­struc­ture pro­gram.

The note pro­gram serves as a flex­i­ble fa­cil­ity for com­pa­nies to is­sue for­eign cur­rency notes in global cap­i­tal mar­kets, and are of­fered on a con­tin­u­ing ba­sis. The listed lender pre­vi­ously said that funds raised through its MTN pro­gram will be used for gen­eral fund­ing and re-lend­ing.

BDO can float dol­lar bonds in tranches un­til such time when it max­i­mizes the ap­proved amount of $2 bil­lion.

Moody’s has given the same rat­ing for BDO’s is­suance of dol­lar debt pa­pers in Oc­to­ber last year, which came ahead of the bank’s an­nounce­ment of the of­fer­ing at the lo­cal bourse. Back then, the bank sold $300 mil­lion bonds in the off­shore mar­ket which it used to set­tle ma­tur­ing debts.

The of­fer­ing fetched a coupon rate of 2.630%, which is deemed the “low­est ever” seen for a Philip­pine is­suer.

The debt watcher said the next tranche of the bonds will come with a five to 5.5-year tenor, to be listed on the Sin­ga­pore Stock Ex­change.

Moody’s gave the Baa2 rat­ing which is a notch above min­i­mum in­vest­ment grade to BDO’s fund-rais­ing exercise as it took note of the bank’s “sta­ble” as­set qual­ity and loss-ab­sorb­ing buf­fers, cou­pled with its prom­i­nent and “grow­ing” fran­chise, more than suf­fi­cient cap­i­tal buf­fers, sta­ble prof­itabil­ity, and ro­bust fund­ing and liq­uid­ity pro­files.

On the other hand, the debt watcher also noted some weak­ness in BDO’s “rel­a­tively un­sea­soned” loan book and its high con­cen­tra­tion in the man­u­fac­tur­ing sec­tor.

MOODY’S In­vestors Ser­vice as­signed a “Baa2” rat­ing to the bank’s dol­lar notes.

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