Metro Manila (CNN Philippines, April 27) — The Ayala-led Bank of the Philippine Islands (BPI) has shelved a plan to issue dollar-denominated bonds in favor of a syndicated loan to refinance a part of its maturing $600 million debt, a senior bank official said on Thursday.
The bank said “very volatile” market conditions prompted it to reconsider its dollar bond plan that was first announced in January. The bond float was initially scheduled for the second quarter.
“The certainty of getting it done is better compared to a bond because a bond issuance is subject to market conditions, and we know conditions right now are very volatile in the financial market. So yes, we are going to do a refinancing of our maturing bond, but on the peso side,” BPI treasurer and global markets head Dino Gasmen said.
The bank has $600 million in debt papers falling due this year.
“Maturity is $600 million. We are going to refinance less, just a portion. We have the extra funds to pay off the entire debt,” Gasmen explained.BPI expects to end 2023 with a loan growth of “lower double-digit,” close to the 14.9% lending growth it experienced in 2022. Lending increased by 13.2% in the first quarter.This comes against a backdrop of rising borrowing costs after the Bangko Sentral ng Pilipinas took the key policy rate to 6.25% following successive rate hikes from 2022 totaling 425 basis points.“That reflects a slight slowing down in the economy that we expect for this year. That being said, 13.2% is still an above industry growth rate and still very positive. That’s the trend we’re looking at through the rest of the year and kind of lower double digit side in terms of total loan growth,” BPI chief finance officer Eric Luchangco said.Loan growth will be powered by a mix of corporate and consumer lending, thanks to the return of jobs and a revival in tourism. BPI’s credit card base and loans grew by 28% and 38.7% in the first quarter, respectively, higher than the industry average, according to bank officials.The bank is renovating 25 of its branches across the country in order to convert them into a “digital bank” model. The first digital branch will open in Agoo, La Union, early next month.“Strong loan growth will continue to be driven by corporate lending.” BPI President Jose Teodoro Limcaoco said. “We continue to be very bullish about the economy despite continued inflation, high interest rates, we think consumer sector remains resilient.”
In the first quarter, the bank managed to keep loan defaults at 1.8% of total loan book, while cutting loan loss provisions to ₱1 billion as a sign of hope that delinquencies could be “very well managed.”
