Landbank plans record P50 billion bond issue in Q4

MANILA, Philippines — State-run Land Bank of the Philippines plans to raise  as much as P50 billion in its biggest bond sale toward the end of 2024 as it expects policy rates to finally ease.

On the sidelines of the Financial Executives Institute of the Philippines general membership meeting yesterday, Landbank president and CEO Lynette Ortiz said their priority is to get to the debt market again via bond issuance.

“We’re doing all the spade work and documentation to get there. We want to raise bonds by the last quarter. We want P25 billion to P50 billion,” Ortiz told reporters.

“This will be onshore but admittedly, offshore is not off the table. We would also like to take a look at the dollar bond but for now, priority is domestic,” she said.

If this pushes through, this will be Landbank’s biggest bond issuance.

Landbank last went to the debt market in 2021 via a sustainability bond issuance, raising P5 billion.

Ortiz said proceeds of the planned bond sale would be used to fund the bank’s loan programs.

Further, the Landbank chief is also banking on the policy easing of the Bangko Sentral ng Pilipinas (BSP) to be a perfect time for them to issue bonds.

Last week, the Monetary Board kept key policy rates unchanged at a near 17-year high of 6.5 percent as risks to the inflation outlook remain tilted toward the upside.

However, the BSP has signaled the possibility of monetary policy easing by August.

Other analysts are expecting the same move while some are also leaning toward the conservative side and penciling in a rate cut by end-2024.

“Timing is everything. When you go to the market, you don’t want to be subject to the vagaries of up and down. That would not be proper balance sheet management,” Ortiz said.

She noted that Landbank’s priority is to build its liquidity position and the timing will be up to them at the end of the day.

“So if by that time, the markets are not good and rates are way too high, more than what we’d like to actually pay or what we deserve, then we can delay,” Ortiz said.

“I think as far as the BSP Governor (Eli Remolona) and MB (Monetary Board) is concerned, it’s really just a matter of time that they are absolutely assured that inflation is in check before rate cuts will happen,” she said.

Further, Ortiz emphasized that Landbank is in the middle of discussing the critical aspects of recommendations to amend the bank’s charter as earlier pushed by Finance Secretary Ralph Recto.

One proposal is to increase Landbank’s capital to P1 trillion from the current P200 billion, its ability to go to both equity and capital markets to be able to raise proper funding, as well as its planned public listing.

“We need to go through the nuts and bolts of how that’s all going to work out. Our ability to access the debt capital markets is important and to do it in a swift manner as markets change quickly,” Ortiz said.

For now, Ortiz said the Landbank is hoping to secure necessary changes in its charter within this year.