World Bank’s private investment arm pumped more cash into Yuchengco-led Rizal Commercial Banking Corp. (RCBC) in support of its efforts to fund big-ticket infrastructure projects and expand financial access in the Philippine countryside.
In a statement, World Bank’s International Finance Corp. (IFC) said it was the biggest lender involved in RCBC’s recent issuance of $320 million worth of IOUs.
“Our investment in RCBC will allow the bank to participate in funding much-needed infrastructure projects … as well as support efforts increasing financial inclusion by providing access to financial services to small and medium enterprises,” IFC Philippines country manager Yuan Xu said.
RCBC this month completed a major bond issuance to bolster its growth plans. The bank borrowed $320 million by issuing medium-term fixed rate notes maturing in five years and three months. IFC said it accounted for $75 million of this amount.
The decision to borrow in the form of bond sales reveal the bank’s intention to participate more aggressively in public-private partnership (PPP) projects.
As a key part of its economic program, the government is ramping up infrastructure spending from 2.6 percent of the country’s gross domestic product in 2010 to a targeted 5 percent in 2016. On top of government-funded projects, the Aquino administration is also banking on PPPs for infrastructure development.
After awarding 10 large PPP contracts over the last five years, the government is now tendering the next wave of such projects, which will require massive financing over longer tenors.
IFC’s support “was a key ingredient to the success of RCBC’s bond issuance, with the participation of more than 100 domestic and international investors,” says RCBC president and CEO Lorenzo Tan said.