BSP okays Tier 2 offers of PNB, Security Bank

The Bangko Sentral ng Pilipinas (BSP) has approved the planned Tier 2 offer of Security Bank and the Philippine National Bank (PNB), paving the way for the two banks to beef up their capital.

According to the BSP, Security Bank is planning to offer P3 billion worth of subordinated notes callable within 10 years while PNB is planning to offer $140 million worth of notes with similar terms.

BSP Deputy Governor Alberto V. Reyes told reporters that the MB approved both plans in principle pending the review of legal documentations that would complete the banks‚ requirements for the Tier 2 offer.

The Security Bank offer will be underwritten by ING Baring while PNB’s offer would be underwritten by JP Morgan Securities.

The PNB earlier announced that it planned to undertake the capital-raising exercise with a Lower Tier 2 bond issuance next month in a bid to strengthen its capital base.

The capital raising will involve the issuance of $140 million Unsecured Subordinated Dollar-denominated Notes (USDNs) that will mature in 2014 with a call option on the 5th year.

The PNB notes will be listed in the Singapore Stock Exchange and will have an indicative yield of nine percent to 9.5 percent. J.P. Morgan Securities Ltd. is the sole arranger and bookbuilder of the issue.

Given the recent successes of Tier 2 global bond issuances of some Philippine banks, PNB said it is confident that its own Tier 2 offering would also be well-received by investors.

PNB said it is banking on its franchise in its traditional areas of strength and early turnaround story.

The $140 million bond issue is expected to improve the bank’s capital adequacy ratio to 16.1 percent from the present 10.2 percent and boost capital from the current level of P24.15 billion as of Sept. 30, 2003 to P31.9 billion after the Tier 2 offer. – Des Ferriols