RCBC raises P7B from sale of debt notes

Screengrab from www.rcbc.com

MANILA, Philippines — The Yuchengco-led Rizal Commercial Banking Corp. has raised P7 billion from the sale of debt notes qualifying as tier 2 capital under the Basel 3 capital adequacy framework.

The notes have a tenor of 10 years and three months but RCBC will have the option to redeem the notes after five years and three months. As such, the coupon rate was set at 5.375 percent per annum or based on a five-year benchmark.

“The demand for our tier 2 notes exceeded our target of P5 billion and we decided to issue P7 billion to accommodate orders from clients,” RCBC senior executive vice president and treasurer Jose Emmanuel Hilado said in a disclosure to the Philippine Stock Exchange on Thursday.

“We are happy with the outcome of our offering and the overwhelming support from our clients,” Hilado said.

The notes will be issued on June 27. The offering was originally scheduled to run until June 20 but RCBC closed the offering early given strong demand.

Deutsche Bank AG Manila was the sole arranger, bookrunner and selling agent for this offering. Multinational Investment Bancorporation was an additional selling agent while RCBC was a limited selling agent.

RCBC is issuing the tier 2 notes to strengthen the bank’s capital base and capital adequacy ratio (CAR) and to support asset growth as well as expand the bank’s loan-term funding base, especially in light of Basel 3 requirements, which took effect this year.

Basel 3 framework is a complex package of reforms designed to improve the ability of banks to absorb losses. It also extends the coverage of financial risks and requires stronger firewalls to protect banks especially during periods of stress.

As of the end of March, RCBC had a Basel 3-compliant tier 1 CAR of 10.72 percent and total CAR of 11.31 percent. It is the fifth largest private local bank in the country in terms of resources.

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