BANCO de Oro Unibank Inc. (BDO), the country’s largest, sold close to P10 billion worth of subordinated debt notes from which it plans to accept at least P8 billion.

The proceeds will help boost its ability to lend and keep its capital adequacy ratio above the end-March 2010 level of 14 percent.

BDO originally intended to sell P5 billion in so-called sub-debt notes, also known as tier-two IOUs, but attracted so much attention the total tenders nearly hit P10 billion.

In a statement, BDO said the tier-two sale was supposed to have ended today, June 17, but was closed two days ahead of program on account of the oversubscription from institutional, as well as retail investors.

The bank’s sub-debt notes were well received on account of the 6.5-percent annual interest its holders stand to receive before these mature after 10 years and three months.

The sub-debt notes has a call option of five years or one that allows the bank to redeem the IOUs by then.

This was the fourth tier-two sale BDO has undertaken thus far.

This fund-raising program is popular among banks as the transaction generates additional lending firepower for shareholders who would otherwise have to dip into their own pockets for the additional capital needed for expanded operations.

The Manila branches of Deutsche Bank AG and the British-owned lender HSBC were joint-lead arrangers, book runners, as well as selling agents of the transaction.

Multinational Investment Bancorp. was also designated as selling agent and market maker or one ready to buy or sell the debt notes at publicly quoted prices.

BDO itself also acted as selling agent for the debt notes but only on a limited basis.