Metrobank’s $100-M notes get good rating

SINGAPORE – Moody’s Investors Service assigned a prospective rating of Ba1 to Metropolitan Bank & Trust Co.’s (Metrobank) proposed $100 million subordinated notes due 2012.

The rating reflects Metrobank’s status as the Philippines’ largest bank, its well-established middle-market franchise, and anticipated strong regulatory support in case of need.

Incorporated also in the rating are the risk that the deteriorating environment could pressure the bank’s financial health, which has already been weakened by unfavorable events following Asia’s financial crisis, as well as the issue’s structural subordination to senior bank obligations.

The outlook on the rating is stable.

Despite the proposed notes’ subordinated status, the issue was rated above the bank’s deposits, which is constrained by the country’s foreign currency deposits ceiling.

Furthermore, Moody’s believes that the risk associated with the issue’s subordination is mitigated by the low likelihood that the bank will face a regulatory intervention that could potentially cause credit losses to the noteholders, given the bank’s systematic importance.

The prospective rating of Ba1 on Metrobank’s proposed subordinated notes was assigned on condition that no material changes are made to the terms and conditions of the notes reviewed. The proposed issue, due 2012, has a fixed interest rate reset feature, and is callable (with Bangko Sentral ng Pilipinas' approval) in 2007.

The existing ratings of Metrobank are: long-term/short-term deposit of Ba2/Not Prime and bank financial strength rating of D.

Metropolitan Bank & Trust Co., incorporated in the Philippines had total assets of P470.7 billion ($9.1 billion) at the end of December 2001. Established in 1962, the bank grew rapidly and secured its dominant status with the acquisition of three smaller banks in late 1999. Metrobank is an integral part of the Metrobank Group of Companies, which also has diversified interests in insurance, leasing, property, stockbroking and travel.