BPI RISE Bonds due 2024: Frequently Asked Questions


Note: The set of FAQs highlight the information found in the Pricing Supplement dated January 5, 2023 (“Pricing Supplement”), and is qualified by its entirety by, and must be read in conjunction with, the more detailed information and financial statements appearing in the Pricing Supplement, and in the Final Offering Circular dated January 5, 2023 (the “Offering Circular”). Investors should read both documents and all the terms and conditions relating to the issuance of the Bonds prior to making an investment decision.

What are bank bonds?

These are bonds issued by banks pursuant to BSP Circular 1010 (Series 2018) and BSP Circular 1062 (Series 2019), which is further clarified by BSP Memorandum No. M-2020-001.

What is the BPI Php Bond Program?

The Bonds are the first tranche under the Php 100,000,000,000.00 Php Bond Program approved by the Board of Directors of BPI on 18 May 2022. This is separate from the previous Bank Bond program established in 2019, which has been fully utilized. The objective of the Program is to diversify the Bank’s funding sources and support, when possible, the Bank’s sustainability strategy.

Why should I invest in bank bonds?

Bank bonds are issued by financial institutions which are regulated by the BSP. As such, banks are governed by regulatory guidelines particularly on risk management. Bank bonds offer an alternative form of investment to both retail and institutional investors. Tenors that can be issued include shorter tenors (1 to 3 years), which are not traditionally available through the long-term negotiable certificates of time deposits or LTNCTD market. The Bonds are also negotiable, which means they may be bought or sold in the secondary market through an eligible trading participant on PDEx.

What is the rationale behind the Bonds issuance?

We value Micro, Small, and Medium Enterprises (“MSMEs”) as important drivers of the country's economic development.

According to the Department of Trade and Industry’s 2021 MSMEs Statistics, 99.6% from a total of 1.1 million business enterprises classify as a MSME. This provides 5.5 million jobs or 65.5% of the country’s total employment.

In continued recognition of the importance of MSMEs to the Philippine economy, and given the limited size of their balance sheet and cash flow constraints, BPI has launched the Bonds with the proceeds to be used by the bank for financing or refinancing eligible MSMEs to support the community’s recovery from the pandemic and growth.

SMEs have limited resources, have shorter financial buffer, and are more exposed to various risks, including environmental and social risks – and therefore, need stronger support from banks. Beyond SMEs, the proceeds of the Bonds will also finance micro-entrepreneurs who, normally have limited access to basic banking services (especially loans), because they do not meet the basic requirements of banks.

How is the BPI Bonds offering different from previous BPI Bond Issuances?

The main difference will be the use of proceeds. While most of the past issuances have used proceeds for general corporate purposes (including funding source diversification and balance sheet expansion), the use of proceeds for this offering will specifically be for financing or refinancing the business requirements of eligible MSMEs in line with BPI’s Sustainable Funding Framework.
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Following the previous BPI CARE Bonds which sought to enable MSMEs to hurdle significant challenges posed by the pandemic, the Bonds aim to further the bank’s effort to continue its commitment to financial inclusivity and nation building.

The SEC confirmed that BPI Bonds qualifies as ASEAN Social Bonds. What does this mean?

Qualifying as an ASEAN Social Bond means that the issuance will provide clear social benefits, resulting from affordable, accessible, and appropriate financial services provided by BPI.  Proceeds from the BPI Social Bonds are used to finance MSME businesses, providing employment, supply chain development, and local economic growth, which in turn uplift the lives of the local communities.

SEC has confirmed that the BPI Social Bonds are compliant with the ASEAN Social Bond standards and the requirements under SEC Memorandum Circular No. 9, Series of 2019. These standards were developed based on the International Capital Markets Association’s Social Bond Principles to enhance transparency, consistency, and uniformity of ASEAN Social Bonds.

Are bank bonds insured?

No. As bank bonds are not deposit instruments, they are not insured by the Philippine Deposit Insurance Corporation.

Can the Bonds be pre-terminated by the holders?

No. Holders of the Bonds are not allowed to pre-terminate the Bonds prior to the stated maturity. However, bondholders may sell their holdings in the secondary market through the PDEx. Such sale will be subject to: (i) the availability of a willing buyer in the market; and (ii) taxes, fees and other charges.

What are the risks involved in investing in the Bonds?

The Bonds pay a fixed rate until its stated maturity date. If investors decide to sell the Bonds in the secondary market, they shall be exposed to price risk depending on the prevailing market rate/price of the Bonds at that time. Secondary market trading may also involve liquidity risk, wherein there is no assurance that an active secondary market for the Bonds will develop or how the Bonds will perform.

The liquidity and the market prices for the Bonds can be expected to vary with changes in market and economic conditions, the financial position and prospects of the issuer and other factors that generally influence the market prices of securities. There is no assurance that Bonds may be disposed at prices, volumes or times that are deemed appropriate by the bondholders.

The above does not purport to be a complete description of all of the risks involved in investing in the Bonds and is qualified in its entirety by the more complete information provided in the Offering Circular and the Pricing Supplement. The investor should read “Investment Considerations” in the Offering Circular, for more information on potential risks related to the Bonds.

Is partial sale of Bonds allowed?

Yes, subject to the regulations of PDEx. In the event that the bondholder would like to sell only a portion of their investment, the original Registry Confirmation (“RC”) should be given to the trading participant. The original RC will then be cancelled and the Registry will issue two new RCs, one with the transferred amount to the new investor, and the other with the remaining amount retained to the original holder.
 
This is subject to the minimum subscription amount of Php 1,000,000.00 and increments of Php 100,000.00 for primary issuance. In the secondary market, however, the minimum subscription amount and trading lots is only Php 10,000.00

How do I place an order?

Orders are booked through BPI Asset Management and Trust Corporation (“AMTC”) under a Portfolio Management Account ("PMA") or Investment Management Account ("IMA"). Investors will be required to submit the necessary PMA/IMA documents.

Please be informed that AMTC will charge 0.10% per annum computed on the Net Asset Value on a daily basis.

Do I need to have a new BPI deposit settlement account?

Investors whose orders are to be booked via PMA/IMA may elect their existing BPI account/s as settlement accounts ("SETA") for their respective PMA/IMA, as long as the settlement account has the same name as the PMA/IMA account.

Are “Joint Investments” allowed in this instrument?

Yes, “Joint" and “or” accounts can take part in the Bonds issuance. All investors are also required to submit complete KYC documentation for all names listed in the sales report and account opening documents to comply with relevant provisions of the Anti-Money Laundering Act of 2001, as amended.

Who are the prohibited holders of the Bonds?

Generally, the following are prohibited to hold the Bonds:

a. The Issuer, including its related parties (i.e., subsidiaries, affiliates);

b. The Issuer's DOSRI as defined under the Manual of Regulations for Banks and their close family members;

c. US person;

d. For the duration that they are engaged for a proposed issuance of any tranche/series of BPI's Bonds: select officers and staff of Arrangers and Selling Agent/s; select officers and staff of Bond Booking Vehicle; select officers and staff of Legal Counsels; select officers and staff of Auditors;

e. Persons not qualified under Governing Regulations as defined in the Offering Circular;

f. Other restricted parties as defined in the Offering Circular.

Can a minor be included as an investor or bondholder?

No. A client, being the trustor/principal, must be at least 18 years old.

When will investors receive principal and interest payments?

Investors will receive interest payments on a quarterly basis on the designated interest payment dates, subject to business days conventions which, for this tranche, is a 30/360 ISMA day count basis. Interest is computed based on the outstanding balance of the Bonds issued on January 30, 2023.

Can the interest rate applied change?

No, the Bonds offer a fixed coupon rate to all investors throughout its life. While the proceeds of the Bonds will be used by BPI to finance or refinance the business requirements of eligible MSMEs, the principal and coupon/interest payments of the Bonds will not be directly linked to the loan performance of the MSMEs.

What are the tax implications of investing in the Bonds?

Interest on the Bonds is subject to final withholding tax at a rate between 20% or 25% or such other rates as may be required by law or regulations, depending on the type of bondholder:

      

The aforementioned final withholding tax rates may be reduced by applicable provisions of tax treaties in force between the Philippines and the tax residence country of the non-resident Bondholder. Most tax treaties to which the Philippines is a party provide for a preferential reduced tax rate of 15% where Philippine sourced interest income is paid to a resident of the other contracting state. However, tax treaties would also normally qualify that the preferential reduced tax rates will not apply if the recipient of the interest income, even if considered a resident of the other contracting state, carries on business in the Philippines through a permanent establishment and the holding of the relevant interest-bearing instrument is effectively connected to such permanent establishment.

​​​​​​​ The investor should read the “Philippine Taxation” section in the Offering Circular for more information on applicable taxes. Prospective purchasers of the Bonds are advised to consult their own tax advisers as to the tax consequences of the purchase, ownership and disposition of the Bonds, including the effect of any national or local taxes, under the tax laws or regulations relevant thereto, and which are applicable in the Philippines and any other country of which they may be nationals or residents.


Who do I contact regarding BPI RISE Bonds due 2024?

Interested investors may visit any BPI branch or contact BPI Capital at bpicapital@bpi.com.ph.

For inquiries and comments, send us a message or call our 24-hour BPI Contact Center at ‎(+632) 889-10000.

Disclaimer

THESE OFFERING CIRCULAR AND PRICING SUPPLEMENT (the “OFFERING MATERIALS”) ARE BEING DISPLAYED ON THIS WEBSITE TO MAKE THE OFFERING MATERIALS ACCESSIBLE TO INVESTORS IN THE PHILIPPINES AND ARE TO BE VIEWED EXCLUSIVELY WITHIN THE PHILIPPINES.

The Offering Materials on this website are intended to be available only to Philippine and non-Philippine citizens residing in the Philippines, corporations organized under Philippine law and juridical entities licensed to transact business in the Philippines. The Offering Materials are not intended for distribution outside the Philippines. If you have gained access to this transmission contrary to the foregoing restrictions, you will be unable to purchase any of the securities described herein.

The Offering Materials and the information contained herein are subject to completion or amendment without notice. Under no circumstances shall these Offering Materials constitute an offer to sell or a solicitation of an offer to buy any securities nor shall there be any offer, solicitation or sale of the securities in any jurisdiction where such offer, solicitation, or sale is not permitted.

THE BONDS REFERRED TO IN THIS COMMUNICATION ARE SECURITIES EXEMPT FROM REGISTRATION UNDER SECTION 9.1(E) OF THE SECURITIES REGULATION CODE AND WILL ACCORDINGLY NOT BE REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION. FURTHERMORE, THE BONDS ARE NOT DEPOSIT INSTRUMENTS AND ARE NOT INSURED BY THE PHILIPPINE DEPOSIT INSURANCE CORPORATION. (“PDIC”).

This announcement is subject to change/completion and is not an offer for sale of the Bonds or a solicitation of an offer to buy the Bonds. Prospective investors should refer to the Final Offering Circular dated January 5, 2023 (“Offering Circular”) and the Pricing Supplement dated January 5, 2023 (the “Pricing Supplement”) for full details on the Program and the Bonds. BPI and the Joint Lead Arrangers reserve the right to adjust the Offer Period and the Issue and Listing Date. All terms are subject to the Offering Circular and Final Pricing Supplement.
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This does not purport to, and does not, contain all of the information that may be required to evaluate factors relevant to a recipient making any investment decisions. Each recipient should make its own independent appraisal of, and investigation into, the financial condition, risks, creditworthiness, affairs, status and nature of BPI as the basis of any investment decision.

None of the information should be interpreted as investment advice of any kind and should not be used as the basis for any financial decision to invest in the Bonds or any securities or participation in any transaction. Prospective investors should consult their own counsel, accountants, or other advisors as to legal, tax, business, financial, and related aspects of the purchase of the Bonds, among others. No warranty or representation, express or implied, is given as to the accuracy or completeness of that information. In no event will BPI, its affiliates, any of the Joint Lead Arrangers, the Sole Selling Agent, nor any of their respective directors, employees or advisors accept any liability with regard to the information contained herein.

BPI is regulated by the Bangko Sentral ng Pilipinas, https://www.bsp.gov.ph