Fitch rates BDO's $300-M 2021 notes 'BBB-'

Credit rating agency Fitch Ratings has given BDO Unibank Inc.'s $300-million senior notes due 2021 a long-term rating of 'BBB-' with a stable outlook.

A credit rating of 'BBB-' signifies that expectations of credit risk are currently low and the capacity for settling financial commitments is considered adequate.

On October 18, BDO raised $300 million from a fixed-rate senior notes issuance. The issue was priced at 2.630 percent with a maturity of five years.
BDO earlier said the proceeds of the senior notes will be used for general funding and re-lending purposes.

The issuance forms part of its $2-billion medium-term note program representing direct and unsecured obligations of the bank.

Fitch said the senior notes are rated at the same level as BDO's 'BBB-' long-term foreign-currency issuer default rating (IDR).

"This is because the notes will constitute direct, unconditional, unsubordinated and unsecured obligations of the bank, and will rank equally with all its other unsecured and unsubordinated obligations," the credit watcher noted.

It added that the notes' rating is sensitive to changes in the bank's IDR, which is driven by its viability rating (VR) of 'bbb-'.

VR measures the intrinsic creditworthiness of a financial institution, and reflect Fitch's opinion on the likelihood that the entity will fail.

Fitch said that a VR of 'bbb-' means that a bank's fundamentals are adequate, such that there is a low risk that it would have to rely on extraordinary support to avoid default. However, adverse business or economic conditions are more likely to impair this capacity. — Ted Cordero/VDS, GMA News