PNB closes P3.5-B notes offer ahead of schedule

MANILA, Philippines - The second tranche of Philippine National Bank’s unsecured subordinated notes worth P3.5 billion was oversubscribed, prompting the bank to close the offering ahead of schedule.

The notes, which qualify as Tier 2 capital, form part of the P10-billion notes offer approved by the Bangko Sentral ng Pilipinas (BSP) last year. Last June, PNB issued the first tranche worth P6.5 billion.

However, the second tranche pegged a coupon rate of 5.875 percent per annum, lower than the 6.75 percent for the first tranche.

PNB executive vice president and head of Treasury group Horacio E. Cebrero nevertheless expressed satisfaction with the reception of the debt offer.

“Despite the competing issues in the market, the demand for the Tier 2 notes remained strong, reflective of investors’ positive credit outlook of the bank, thus allowing us to price the issue almost at par with the 10-year PDST benchmark,” Cebrero said, adding that the bank retains the right to redeem the notes after the end of the fifth year.

ING Bank NV (Manila) was tapped as the lead manager and sole bookrunner for the issue. First Metro Investment Corp. (FMIC), Multinational Investment Bancorporation and ING are the selling agents while Allied Banking Corp., PNB Capital and Investment Corp., and PNB were likewise tapped as limited selling agents.

The net proceeds of the P10-billion notes will be used to finance asset growth and maintain a strong capital base, in anticipation of the full implementation of the international Basel III risk and capital framework.

Late last year, the Lucio Tan-led universal bank issued P3-billion worth of long term negotiable certificate of deposits (LTNCDs), proceeds of which will be used for general corporate purposes and further strengthen banking operations.

The LTNCDs will be issued in minimum denominations of P500,000 and increments of P100,000.

At the end of 2011, the bank’s capital adequacy ratio (CAR) stood at 21.65 percent. With the full implementation of Basel III, Tier 1 CAR could be increased to 10 percent from five, and consolidated CAR from 10 percent to 12.5.