BDO to establish US$2 billion EMTN program

BDO Unibank, the Philippines’ largest bank in terms of assets, looks to lower funding costs.

It will establish a US$2 billion Euro Medium Term Note (EMTN) program to raise funds for infrastructure lending. BDO said the move is part of its liability management initiatives to use longer-term funding sources and lower funding costs.

BDO said setting up the EMTN program is a preparatory move 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 is also planning to retire US$239 million of its Series 1 Tier 2 notes this November.

Part of BDO’s recent rights offer was earmarked for the redemption of these higher-cost notes that carry a coupon rate of 7%. The retirement of these notes will reduce the bank’s cost of funding and improve its capital structure in favor or higher quality core Tier 1 capital.