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When BDO Borrows Cheaper Than the Republic

 


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What a 4.375% coupon reveals about confidence, currency, and the “gold standard” bank.

BDO Unibank recently priced USD 500 million of 5‑year fixed‑rate senior notes with a 4.375% coupon, a deal the bank said was more than 3.2x oversubscribed—a tidy headline in any market cycle. 

Now hold that number up against the Philippine government’s peso borrowing benchmarks. On the Bureau of the Treasury’s published snapshot, T‑bill auction averages sit roughly in the high‑4% range (with posted averages around 4.759% for 91‑day, 4.873% for 182‑day, and 4.962% for 364‑day in the displayed auction results), while the 5‑year reference yield shown is around 5.564%. 

At face value, it looks like a private bank is borrowing at a lower stated rate than the sovereign—an optics-rich contrast that invites the easy conclusion: BDO is “safer” than the government. But capital markets are rarely that simple, and responsible interpretation matters as much as the headline.

First, the crucial caveat: BDO’s bond is in USD, while the government numbers are in PHP. Currency, inflation expectations, and investor bases are not footnotes—they are the story. Peso yields embed local inflation and currency-risk premia that USD investors do not demand in the same way. So the gap between 4.375% (USD) and ~5.56% (PHP 5‑year) does not, by itself, prove the Republic is a worse credit. 

Yet the comparison still carries a meaningful message: BDO can access international capital at investment‑grade pricing conditions, supported by its disclosure that the notes are expected to be rated “Baa2” by Moody’s. That signal—global money showing up in size for a Philippine issuer—reflects trust in governance, balance‑sheet strength, and institutional staying power. 

And BDO’s scale makes that trust legible. In its quarterly disclosures, the bank reported total resources of ₱5.268 trillion as of September 30, 2025, alongside nine‑month net profit of ₱63.319 billion—numbers consistent with a franchise that sits at the center of the country’s financial plumbing. In the same disclosure set, BDO also positions itself as the country’s largest bank by key metrics (assets, loans, deposits, and trust AUM) based on published statements as of mid‑2025. 

So what should business readers take away?

One: Markets are pricing confidence—not just credit. A heavily subscribed USD deal at a 4.375% coupon suggests investors view BDO as a benchmark-quality borrower within its peer set.
Two: Government yields are macro mirrors. The peso curve reflects inflation expectations, liquidity, and policy path as much as it reflects sovereign risk.
Three: In a world where credibility is measured in basis points, BDO continues to trade like the banking sector’s reference name—what many would call the Philippine “gold standard,” not because it beats the sovereign in a simplistic coupon race, but because global capital consistently validates the franchise.

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