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TRADE FINANCE | Cesar Tordesillas, Philippines

BDO to establish a $2B EMTN program

BDO will establish a US$2 billion Euro Medium Term Note program and to retire P10 Billion of Tier 2 debt by November 2012.


The EMTN program is a medium-term foreign currency funding facility that will allow BDO the flexibility to issue foreign currency denominated notes, from time to time, in the international capital markets.

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.

The bank said in a disclosure to the Philippine Stock Exchange that these are part of its liability management initiatives to tap longer-term funding sources and lower funding costs.

BDO likewise plans to exercise the early redemption option on its Series 1 Tier 2 Notes by November 21, 2012. Part of the proceeds from BDO’srecent stock rights offer have already been earmarked for the redemption of these higher-cost Notes, which carry a coupon rate of 7 percent.

“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,” BDO said.

BDO successfully raised P43.5 billion from a rights offering of common shares at the end of June 2012. A total of 895.22 million rights shares were issued at the offer price of P48.60 each.

“This represents a key milestone not only for BDO but also for the Philippines, being the largest ever equity capital markets transaction by a Philippine issuer,” the bank said in a statement.

The offer strengthened BDO’s Common Equity Tier 1 Capital, and provides a comfortable buffer to the more stringent Basel III capital requirements expected to be implemented by the BSP.

BDO believes the offer has better-positioned it to fulfill its medium-term growth objectives and take advantage of the positive outlook on the Philippine economy.

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