Metrobank to redeem $125-M hybrid bonds

MANILA, Philippines - Metropolitan Bank & Trust Co. is set to redeem $125 million worth of hybrid bonds in February next year as these do not apply as capital under Basel III regulations.

In a notice of optional redemption sent to The Bank of New York Mellon, Metrobank president Fabian Dee said the bank has decided to redeem the nine percent non-cumulative step-up callable perpetual capital security issued in February 2006 starting Feb. 15 next year.

“The bank hereby gives notice to exercise its option to redeem the capital securities on Feb. 15, 2016 (the first optional redemption date) in whole in an amount equal to the optional redemption price per capital security for a total sum of $125 million,” Dee said in the notice dated Dec. 22.

The Bank of New York Mellon served as trustee and principal paying agent of the transaction.

Dee said the Bangko Sentral ng Pilipinas (BSP) approved redemption of the hybrid bonds last Oct. 27.

Last June, Metrobank senior vice president and head of strategic planning division Jette Mendoza told the Philippine Stock Exchange (PSE) the bank would redeem the securities, otherwise known as hybrid Tier 1 capital, by February next year.

“It does not qualify as capital under Basel III because it does not have the loss absorption feature, among others,” Mendoza said.

Metrobank earmarked the issue to strengthen its capital base in compliance with the then international accounting standards (IAS) requirements.

The issue was well-received or eight times oversubscribed. UBS AG, which was the lead manager of the issue, said strong investor demand generated an order book of over $1 billion.

The offering was the first and largest hybrid Tier 1 capital issue from a Philippine bank during that period.

Earlier, Metrobank beefed up its capital to P32 billion from the sale of new shares to existing investors. It completed this stock rights offering last April with the issuance of 435.37 million common shares priced at P73.50 per share.