Metrobank raises P8B from high-yield long-term deposits

MANILA, Philippines–Local banking giant Metropolitan Bank and Trust Co. has raised P8 billion from an offering of high-yielding long-term deposits but due to “overwhelming” demand, a new tranche of the same instrument but with a longer tenor may be launched in the coming weeks.

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Metrobank told the Philippine Stock Exchange on Thursday that it had closed early the offering period for its 5.5-year long-term negotiable certificates of time deposit (LTNCDs). Metrobank added that it’s considering to launch a seven-year tranche in the coming weeks “to satisfy unmet client demand.”

LTNCDs are negotiable certificates of time deposits and are tax exempt for qualified individuals if held for at least five years. These are bank products with long tenors which are offered to investors looking for a higher interest rate compared to regular savings accounts or shorter-term deposits. These instruments are insured by the Philippine Deposit Insurance Corp. (PDIC) up to a maximum coverage per depositor, currently at P500,000.

The offer period for the the 5.5-year LTNCDs – which carried an interest rate of 4 percent per annum — started on October 7 and was originally scheduled to end on Thursday but Metrobank cut short the offering as the issue was oversubscribed by two times the base offer. The bank decided to cap the issue size at P8 billion for the 5.5-year tranche to manage its debt maturities.

Metrobank has leeway from the Bangko Sentral ng Pilipinas to raise as much as P20 billion from an offering of LTNCDs with a tenor of at least 5.25 years to as long as 10 years. It has up to the first quarter of 2015 to complete the program.

The bank said it would work with the same parties for the subsequent tranche: Hong Kong and Shanghai Banking Corp. Ltd. and ING Bank N.V., Manila Branch as joint lead arrangers and selling agents, and Metrobank, First Metro Investment Corp. and Multinational Investment Bancorporation (MIB) as selling agents. MIB will act as market maker for secondary trading of the LTNCDs while the instrument is not yet listed on the Philippine Dealing and Exchange Corp. platform.

Metrobank obtained investment grade rating status from global credit watchdog Moody’s Investors Service last year. The bank has a bank financial strength rating and deposit rating of BAA 3, at par with the Philippine sovereign.

Several big Philippine banks have raised or are raising fresh funds from the offering of LTNCDs over the previous year, aiming to lock in for the long haul vast liquidity released from the BSP’ special deposit account facility.