RCBC raises $300 million from foreign debt market

MANILA, Philippines — Yuchengco-led Rizal Commercial Banking Corp. (RCBC) raised $300 million as it returned to the offshore debt market through the first ever additional Tier 1 securities issuance out of the Philippines.

In a disclosure to the Philippine Stock Exchange (PSE), RCBC said orders peaked at $825 million and at the final price guidance level was over $600 million with orders from 57 accounts.

Asian accounts cornered the bulk of total with 79 percent, while European accounts accounted for the remaining 21 percent. Asset managers accounted for 59 percent, followed by private banks with 24 percent, and hedge funds with 17 percent.

The listed bank said the non-cumulative subordinated additional Tier 1 capital securities qualifying as additional Tier 1 capital under Basel 3 were priced at 6.5 percent, 25 basis points tighter than the initial price guidance.

“The transaction is the first additional Tier 1 securities issuance of RCBC and also the very first additional Tier 1 offering out of the Philippines. The successful additional Tier 1 offering also reopens the US dollar additional Tier 1 bond market of Southeast Asia after the most recent issuance in February,” the bank said in a statement.

Last June, the board of directors of the country’s eighth largest bank in terms of assets approved the issuance a proposal to issue non-cumulative unsecured subordinated capital securities that are eligible as additional Tier 1 capital under Basel 3.

The net proceeds of the fund raising would be used to support and finance RCBC’s medium to long-term asset growth, as well as other general corporate purposes.

The additional funds will also help RCBC comply with and maintain sufficient buffers above the minimum capital thresholds required by the BSP.

Early this year, RCBC further hiked the size of its medium term note program to $3 billion from $2 billion. It has been regularly updating its offshore borrowing program, launching $1 billion in 2011 and doubling to $2 billion in January 2018.

The bank raised $1.59 billion of the total amount, including $275 million in January 2012, followed by $243 million in January, and another $320 million in October 2015, $300 million in March and $150 million in April 2018, and another $300 million via the issuance of sustainability bonds last September.

The listed bank has also been tapping the onshore debt market for much needed funds after it more than tripled its bond and commercial paper program to P100 billion, instead of P30 billion, to further strengthen its regulatory liquidity ratios.

Last July, RCBC raised P16.6 billion via the issuance of peso bonds with a fixed interest rate of 3.25 percent per annum.