Eduardo Francisco, president of BDO Capital and Investment Corp., expects a rise in fund-raising activity next year, as companies look to capitalize on the Bangko Sentral ng Pilipinas’ more accommodative monetary policy aimed at spurring economic growth.
While the head of BDO Capital, the investment banking arm of BDO Unibank Inc.—the country’s largest lender by assets—anticipates a pickup in funding activity, he believes that companies will increasingly turn to bank borrowings, project financing, and sustainable bond issuances to fund expansion and greenfield projects, rather than relying on equity sales through the Philippine Stock Exchange.
Francisco forecasts that the PSE Index will end 2025 at a higher level of 7,700, though this estimate has been downgraded from the previous projection of 8,000 for end-2024. The PSEi closed on Tuesday at 6,734.21, up 2.7 percent from the 6,554.05 level recorded on the first trading day of 2024, when it gained 1.6 percent.
The strong growth in bank lending, particularly from BDO, signals a more optimistic outlook for investments and economic expansion next year, Francisco said. BDO’s loan growth reached 13 percent in the first nine months of the year, indicating that businesses are increasingly confident in securing capital for future projects.
“Businessmen and traders have to borrow in advance to build up their inventory,” Francisco explained during a media forum with the Tuesday Club. “Although third-quarter GDP growth was weak and below expectations, borrowing picked up in October, signaling confidence in the economy moving forward.”
While acknowledging that economic numbers are not yet strong, Francisco highlighted signs of growth in the real economy. He also expressed optimism that the central bank’s dovish stance on monetary policy would support continued expansion in 2025.
However, he noted a key concern regarding U.S. Federal Reserve policy. With the Fed signaling potential interest rate cuts, Francisco warned that the BSP might need to calibrate rate reductions to avoid an already weakened peso from depreciating more. “The government needs to decide: Do we let the exchange rate hit P59 or P60, or do we lower interest rates to support overall economic growth?” he said.
