Rizal Commercial Banking Corp. (RCBC) saw the backlog for its US dollar bond offering reach up to $ 825 million, with most trades coming from Asia.
In a statement released on Monday, the Yuchengco-led bank said it has released its first additional Tier 1 (AT1) offshore offer. This is a 6.50% “Reg S issue” with an initial amount of $ 300 million.
Investors have seen the growth of the Reg S bond market – debt securities that require less strict disclosure from the issuer – as Asians, especially the Chinese, have become richer.
Roughly, 79% of investors who bought RCBC bonds were from Asia. The balance was entered by the European accounts.
The majority of investors were asset managers (59%), followed by hedge funds (17%) and private banks (24%). Credit Suisse was the sole global coordinator and sole bookrunner for the transaction.
RCBC said it is allocating the proceeds of the offering to fund the growth of its assets and other general business matters and to maintain sufficient reserves above the minimum requirements by the Bangko Sentral ng Pilipinas.
“AT1 securities, which have a permanent depreciation mechanism in the event of non-viability, should be rated Ba3 by Moody’s,” said RCBC.
On August 18, Moody’s Investors Service assigned a Ba3 (hyb) rating to the AT1 US dollar equity securities offered by RCBC, perpetual, non-cumulative and AT1 subordinated.
In a statement, Moody’s said the rating “ is three notches below the bank’s Basic Credit Rating (BCA) and the adjusted BCA of baa3, reflecting Moody’s assessment of expected losses over high in light of a mandatory and / or discretionary coupon suspension on a cumulative non-basis, the contractual feature of depreciation of the principal and the subordinated debt of the issue in liquidation. “
The Yuchengco-owned bank, as a reminder, launched two local bond offerings, the proceeds of which were aimed at asset growth, maturing bonds and other general corporate issues.
RCBC has listed its 7.05 billion peso fixed rate bonds with the Philippine Dealing and Exchange Corp. (PDEx) in April, noting that strong investor demand allowed its offer to be oversubscribed more than twice.
Last month, the bank listed with PDEx another bond offering with an order book of 16.6 billion pesos, more than five times the minimum issue size of 3 billion pesos.
The publicly traded bank saw its net profit jump 17% to 3.1 billion pesos in the first half, from 6.66 billion last year thanks to higher trade gains, which rose 80.3% to 5.9 billion pesos. The provision for potential losses rose 94 percent to 5.2 billion pesos at the end of June, from 6.8 billion year-over-year.
The bank reported total assets of 767 billion pesos as of Dec.31, 2019, according to Moody’s.
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