RCBC mulls follow-up to $85-million NCTD issue

MANILA, Philippines - Rizal Commercial Banking Corp. (RCBC) is considering another issue of dollar-denominated negotiable certificates of time deposit (NCTDs) in the last quarter after a successful issuance worth $85 million last month.

RCBC officials said there was very strong demand for the NCTDs that undertaking another issue was not far-fetched.

“Due to strong interest from clients, the bank may consider another issue of the NCTDs in the four quarter,” the bank said in a statement yesterday.

The funds raised from the dollar-denominated NCTDs will be used to expand its banking operations and to offer an alternative investment instrument to its depositors.

RCBC is the first bank in the Philippine market to issue dollar-denominated medium-term deposits in negotiable format and similar to other recent public peso-denominated long term negotiable certificates of deposits (LTNCD) and Lower Tier 2 notes offerings.

The recent dollar-denominated NCTDs are senior deposit obligations and carry a fixed annual interest rate of 3.75 percent, payable quarterly until maturity in 2012. The NCTDs were issued at par.

The NCTDs are negotiable and transferable in the secondary market through a market maker and are covered by the Philippine Deposit Insurance Corp. (PDIC) up to specified limits.

The offer period was from Sept. 22 to 25, through a minimum deposit price of $5,000 and increments of $1,000. Settlement date was Sept. 30.

Deutsche Bank AG, Manila branch was designated as the lead arranger.

Last May, RCBC also raised P4 billion through a Lower Tier 2 unsecured subordinated notes. Lower Tier 2 capital is supplementary capital structured as interest-bearing notes with a limited tenor of at least five years. The notes are subordinated to the claims of the bank’s depositors and senior creditors but senior to its equity shareholders.

The purpose of the Lower Tier 2 offer was to boost and strengthen its capital base, allow RCBC to capture growth opportunities including acquisitions, and in case loan portfolios deteriorate this year.

RCBC is the universal or expanded commercial bank of the Yuchengco Group of Companies. It was ranked fourth overall among Philippine commercial banks with capital at P28 billion, total loans worth P138.8 billion, and total assets of P258 billion.