UBS Warburg acted as sole bookrunner.
The issue was more than 1.5 times subscribed with over 60 percent of the demand coming from international institutional investors. A successful roadshow was conducted by Metrobank’s senior executive led by president Antonio S. Abacan Jr. in Manila, Singapore, Hong Kong, and London.
The 10-year bond issue, which is callable on the fifth year, was tightly priced at 92 basis points over the Republic of the Philippines’ 2008 bond (five-year benchmark). The issue was aggressively priced considering that lower Tier 2 usually carries up to 100 basis points in spread over senior debt because of its subordinated nature.
With a fresh $125 million in capital, Metrobank has now increased its capital adequacy ratio, making it the strongest bank in the Philippines. Proceeds will be invested in low-risk, high-yielding US dollar-denominated instruments in order to eliminate any negative carry from the issue.
"The issue further strengthened our capital base and will allow us to take advantage of a strong Philippine economic performance in the coming years," said Abacan.
A landmark for the entire Philippine banking system, the transaction has paved the way for Philippine banks to tap an entirely new investor base in the international capital markets. Moreover, strong demand for the issue from international investors is a testament to the global investor community’s belief in a Philippine bank and the country’s economic recovery.
Metrobank has always been in the forefront in strengthening its capital base having been the first Philippine bank to raise Tier 2 capital in December last year at $100 million.
This year, it was the first bank to sell non-performing loans (NPLs) to an asset management company (AMC) when it forged an agreement with Asia Recovery Corp., an AMC led by Netherlands-based Rabobank. It was also the first Philippine bank to issue convertible bonds and now the first Philippine bank to issue subordinated bonds in the international capital markets.