Metrobank offers long-term peso bonds

Banking giant Metropolitan Bank & Trust Co. (Metrobank) plans to raise at least P2 billion through a local bond offering, marking the first tranche of its P100-billion borrowing program.

In a disclosure to the Philippine Stock Exchange yesterday, Metrobank said it had named Standard Chartered Bank the sole arranger for the first tranche of its peso bond program.

The first tranche will have a tenor of two to five years to be priced using the applicable peso benchmark, the bank said in the disclosure.

“Issue size will be determined through a book-build process. The bank is looking to raise at least P2 billion, with the option to upsize,” the bank said.

Timing of the issuance will be subject to market conditions.

The objective of Metrobank’s P100-billion bond and commercial paper program is to support lending activities and to diversify funding sources.

Recently, the Securities and Exchange Commission (SEC) approved the framework for the listing of bonds issued by banks on fixed income trading platform Philippine Dealing & Exchange Corp. (PDEx).

The BSP recently issued new rules that made it easier for banks to issue bonds. Previously, the BSP required banks that would like to offer bonds to back up 100 percent of these bonds with government securities as collateral. If the bank will not use government securities as collateral, then the value of collateral must exceed that of the issue size.

A new circular issued by the BSP—circular 1010 series of 2018—scrapped this collateral requirement. However, part of the new requirement for the bonds issued by a bank to be enrolled or traded in a formal market.

Debt issuances of banks are exempted from the registration requirement of the SEC. This is because banks are presumed to be highly regulated by the BSP and by nature, they already have access to public funds by accepting deposits.

The trading of bank securities, however, is subject to SEC-regulated listing and trading rules. If their securities are listed on PDEx, for instance, this will involve SEC-licensed fixed income market salesmen who deal with retail investors. —DORIS DUMLAO-ABADILLA