Philippine Daily Inquirer


- By Doris Dumlao-Abadilla @Philbizwat­cher

Ayala-led Bank of the Philippine Islands (BPI) expects to raise as much as P25 billion from the sale of pesodenomi­nated bonds, upsizing its original offer by two-thirds due to brisk investor demand.

The bonds are priced at a yield of 6.797 percent per annum for a tenor of 1.25 years, BPI Capital managing director Reginald Cariaso said on Monday.

BPI Capital is a selling agent along with British bank HSBC, which is also the sole lead manager and bookrunner.

Asked why the tenor of BPI’s bond issuance was quite short, Cariaso said: “It’s for short-term funding requiremen­ts.”

The base deal of P5 billion was oversubscr­ibed by 7.5 times but the issue size would still be finalized, BPI chief financial officer Maria Theresa Marcial-Javier said.

The final price of 6.797 percent was interpolat­ed for 1.25 years based on the Bloomberg Valuation Service (BVAL) benchmark plus a spread of 20 basis points, Marcial-Javier added.

The bond sale is part of the P50- billion local bond and commercial paper program earlier approved by the bank’s board of directors.

BPI had initially planned to issue only as much as P15 billion for the first tranche. Noting strong investor demand, BPI’s board increased the maximum size of the offer to P25 billion.

More and more banks are tapping the local bond market, mostly to reduce reliance on deposits and gain more access to long-term funding to allow them to support infrastruc­ture for the private sector.

Commercial papers refer to IOUs or debt papers that mature in one year or less, while bonds are IOUs that mature in over a year.

Like government securities, Philippine banks’ debt issuances are exempted from the registrati­on requiremen­t of the Securities and Exchange Commission (SEC). The trading of these bank securities, however, is still subject to SEC listing and trading rules. If their securities are listed on fixed income platform Philippine Dealing & Exchange Corp. (PDEx), for instance, this will involve SEC-licensed fixed income market salesmen who deal with retail investors.

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