RCBC mulls hybrid Tier 1 capital in September

The Rizal Commercial Banking Corp. (RCBC) is preparing to issue a $130 million hybrid Tier 1 capital in September.

"Now is a good time to borrow. Our plan is to tap the offshore market next month because the spreads have tightened," RCBC president Francisco Magsajo told reporters yesterday at the launch of its product designed for overseas Filipino workers (OFWs) being marketed by subsidiary, RCBC Savings Bank.

Citibank N.A. and Credit Suisse First Boston have been retained as the issue managers of the hybrid Tier 1 with Deutsche Bank dropped from the list.

Magsajo said they were looking a nine-percent rate despite the prevailing 8.5 percent for its 10-year issue callable in five years.

There will be a reversal of the original timetable for the issuances of both the hybrid Tier 1 capital and the preferred shares worth P1 billion. With the delay in the flotation, the plan now is to first issue the hybrid Tier 1 in the international market in September.

The preferred shares will be issued between the first week and third week of October.

Earlier, RCBC wanted to float the preferred shares before the hybrid Tier 1 to be able to maximize the 50 percent of Tier 2 capital, which effectively means RCBC can issue as much as P500 million worth of hybrid Tier 1 debt instruments.

RCBC Capital, a sister firm of the bank, will handle the preferred shares, the volume and value of which depends on the unsubscribed portion currently being offered to its existing shareholders.

The debt instruments, the hybrid Tier 1 and the perpetual (non-cumulative) preferred shares will maintain the bank’s capital adequacy ratio (CAR) at 16 percent, where it now stands. It would regress to 11 percent with the implementation of the Basle II. – TPT