BDO plans to issue R15 B worth of CPs

BDO Leasing and Finance, Inc. (BDOLF), the leasing and finance arm of the BDO Group, is applying for a license from the Securities and Exchange Commission (SEC) to issue 115 billion in commercial papers (CPs).

Philippine Rating Services Corporation (PhilRatings) said it has assigned a high PRS Aa minus (corp.) issuer credit rating for BDO Leasing meaning it has a strong capacity to meet its financial commitments relative to that of other Philippine corporates.

The assigned issuer rating considers BDOLF’s strong brand recognition due to the company’s close strategic relationship with its parent BDO Unibank and the slowdown in its asset expansion, coupled with the increase in its past due accounts.

PhilRatings also too into account the continued compression in BDO’s margins and the tempered growth outlook for the domestic economy, as well as rising interest rates which may dampen the demand for leasing and financing.

BDOLF is recognized as one of the leading players in the commercial leasing industry, directly competing with other financing companies affiliated with top Philippine banks and other financial services firms.

As of end 2017, BDO owned about 88 percent of BDOLF’s common shares. BDOLF has benefited from the BDO Group’s extensive market reach and wellestablished presence throughout the country, in terms of marketing referrals, as well as the strong franchise of the Group.

Going forward, BDOLF expects to continue expanding its business revenues.

However, PhilRatings said increases in operating expense will result in the possible continued compression of margins and bottom line results. Rising interest rates and higher taxes and licenses may also have a dampening effect on the demand for credit.

It also noted that, the rising interest rate environment may pose challenges for the leasing and finance industry in terms of growing its business and client base.