Metrobank offers at least P5B in debt notes

Local banking giant Metropolitan Bank & Trust Co. has offered peso-denominated debt notes qualifying as tier 2 or supplementary capital under the tighter Basel 3 global adequacy ratio framework.

A statement issued Tuesday did not specify how much Metrobank would like to raise from the tier 2 offering, but banking sources expected a base offer size of at least P5 billion.

Public offering of the notes started on March 10 and would run until March 21, with the issue date targeted for March 27.

The bank, however, reserves the right to close the offer period earlier. The new notes will have a tenor of 10 years and 3 months, with the bank having an option to redeem after five years and three months.

The minimum investment size is P500,000 with additional investments of P100,000 thereafter.

“The primary purpose for the issuance is for the bank to proactively manage its capital base in anticipation of stronger growth in the future,” the bank said.

Metrobank has mandated ING Bank and Standard Chartered Bank as joint lead arrangers and selling agents for the transaction, while Metrobank and First Metro Investment Corp. are limited selling agents.

Multinational Investment Bancorporation will serve as market maker and selling agent.

Universal and commercial banks were required by the BSP to adopt starting Jan. 1, 2014 the capital adequacy standards under Basel 3—a complex package of reforms designed to improve a bank’s ability to absorb losses.

The framework also extends the coverage of financial risks and puts in place a stronger firewall to protect the institution during periods of stress.

Basel 3-compliant tier 2 notes carry a loss absorption feature. Typically, there is a provision for the instrument to either be written off or converted to common equity as soon as certain trigger events occur.