Metropolitan Bank & Trust Co. (Metrobank) said Thursday it concluded its offering of a dual-tranche, 5-year and 10-year US dollar-denominated notes amid strong investor demand.
The 5-year and 10-year bonds were priced at 110 and 130 basis points above the benchmark US Treasury notes, respectively, with fixed coupon rates of 5.375 percent and 5.50 percent.
The order book was oversubscribed more than 11 times, reaching $5.6 billion from investors globally. Metrobank is the first private bank in the Philippines to issue a long-dated 10-year bond.
Moody’s Investors Service assigned an investment-grade rating of Baa2 to both the 5- and 10-year bonds, on par with the Republic of the Philippines’ sovereign dollar debt.
The issuance established several records for being the longest senior dated note by a private sector bank in the Philippines, the largest non-sovereign note issuance of $1 billion and the tightest ever credit spreads on the 5-year tranche among non-sovereign Philippine issuers.
By geographical allocation, 86 percent of the investors came from Asia Pacific and 14 percent from Europe, Middle East and Africa (EMEA).
By investor type, 73 percent was allocated to fund managers, 14 percent to banks/financial institutions and the remaining 13 percent to insurers, corporations and private banks.
“We are positively overwhelmed with the high interest we received from global investors for this issuance. It shows their strong confidence on Metrobank’s credit and track record in the Philippines. This offering will fund the Bank’s key growth initiatives as we continuously develop innovative financial solutions to serve our clients,” said Metrobank president Fabian Dee.
“We are grateful for the support shown by global investors in our return to the international bond market after a three-and-a-half-year hiatus. The results of this note offering is a clear indication of investors’ trust and confidence in the strongest bank in the Philippines. The proceeds of this fund raising will enable the bank to support our growing pipeline of customer transactions as the Philippine economy accelerates its growth” said Metrobank financial markets sector head Fernand Antonio Tansingco.
Proceeds of the bond issuance will be used to diversify the bank’s funding sources and establish a benchmark for Philippine bank credit in the international capital markets.
Bank of America Securities and UBS were the joint global coordinators and joint bookrunners for the transaction, while MUFG Securities and First Metro Investment Corp. acted as joint bookrunners.
The issuance is part of Metrobank’s $2-billion medium term note program approved by its board of directors on March 22, 2017.
Metrobank last tapped the international bond market in July 2020 when it raised $500 million from the issuance of 5.5-year bonds, which carried a fixed coupon of 2.125 percent, payable semi-annually.
Metrobank posted record earnings of P42.2 billion in 2023, up 28.9 percent year-on- year. This translated into a return on equity (ROE) of 12.5 percent, higher than 10.3 percent in 2022.
Common equity tier 1 (CET1) ratio of 17.4 percent is well-above the minimum regulatory requirement. The bank’s strong profitability and substantial capital base prompted the board to approve a total cash dividend of P5.00 per share for the year.
The regular dividend was raised from P1.60 to P3 per share to be paid out on a semi-annual basis at P1.50 per share. The bank also declared a special cash dividend of P2 per share.