Bank of the Philippine Islands (BPI), one of the Philippines' largest lenders, made a successful debut in the offshore bond market when it priced on August 28 a US$600 million offering that garnered strong investor demand.
The Reg S five-year deal was priced at 99.577% with a coupon of 4.25% to offer a yield of 4.345%. This was equivalent to a spread of 160bp over the US treasuries, or 25bp tighter than the initial price guidance of 185bp.
In executing the transaction, BPI held fixed income investor calls and roadshow meetings in Hong Kong and Singapore on August 24 and 27. The offering represented the largest ever debut issuance for a bank in the Philippines and was part of BPI's initiatives to maximize flexibility in accessing offshore funding.
"The success of our first ever issuance of the notes is a reflection of the investors' confidence in the credit strength of BPI," the bank's president and CEO Cezar Consing says in a statement. "It allows us to diversify our sources of liquidity, lengthen the maturity profile of our borrowings and manage the growth of our balance sheet more efficiently."
BPI began to diversify its funding sources offshore when it announced in September 2016 the signing of a three-year, US$400 million syndicated term loan facility. The transaction was the first of its kind for BPI in the US dollar syndicated loan market and it generated robust demand, which enabled BPI to increase the deal size from the initial amount of US$250 million to US$400 million.
The bond issuance was drawn from BPI's US$2 billion medium-term note programme and the proceeds will be used for general corporate purposes.
The deal was about 3x oversubscribed with an order book of US$1.8 billion from 159 accounts. In terms of geographical distribution, 90% of the bonds were sold in Asia and 10% in Europe. By type of investors, asset and fund managers accounted for 55% of the paper, while banks took 33%, insurance companies and pension funds took 10%, and private banks and other investors took 2%.
BPI Capital Corporation acted as the sole global coordinator for the transaction, as well as a joint bookrunner, along with Deutsche Bank, HSBC and J.P. Morgan.