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BDO $2-B note program rated Baa2

by August 30, 2017 General

MOODY’S Investors Service assigned a Baa2 investment grade rating to the $2-billion medium-term note program of Banco de Oro Unibank Inc. (BDO) maturing this year.

In a statement on Wednesday, Moody’s said the Baa2 rating for US dollar senior unsecured notes was established in 2012, with the issuance maturing in five to five-and-a-half years listed on the Singapore Stock Exchange.

The drawdown will be issued out of BDO’s head office in the Philippines, and the Moody’s outlook on the rating is stable.

Moody’s said the rating is anchored on BDO’s “baa2 baseline credit assessment” (BCA) and Moody’s expectation of a very high probability of systemic support from the Philippine government, which was also given a stable Baa2 rating.

The baa2 BCA takes into account BDO’s domestically focused, prominent and growing franchise; stable asset quality and loss-absorbing buffers; sufficient capital levels that exceed regulatory minima; stable profitability, supported by a gradual expansion in net interest margin; and robust funding and liquidity profiles.

“The BCA also incorporates the weaker aspects of BDO’s profile, including downside risks to loan quality posed by a relatively unseasoned loan book and high concentration in the manufacturing sector,” it said.

BDO is the Philippines’ largest bank in terms of assets, loans, deposits and trust funds under management based on published statements of condition as of March 31, 2017.

In the second quarter of 2017, the bank’s net income eased by 2.6 percent to P7.5 billion from P7.7 billion a year earlier.

In the first six months, its net income rose 0.3 percent from a year earlier.