Lead managed by UBS AG, the Metrobank deal has priced $125 million in perpetual securities with a semi-annual coupon of nine percent. The non-cumulative bond has a call option after 10 years. The issue was well-received and more than eight times oversubscribed. UBS sources saidthat "unofficial price talk was at mid-nine-percent level and was subsequently brought down due to strong investor demand which helped generate an order book of over $1 billion." The issue is the largest total bid to-date for a Philippine bank offering.
"Given the high quality of the credit," said a banker at UBS, "we managed to build an impressive order book with nearly 30 percent of the securities placed with European and off-shore US accounts, and the balance placed across the Asian region. Metrobank has been successful in setting a very important benchmark for Philippine bank issuers."
Metrobank president Antonio S. Abacan Jr. commented, "We are very pleased with the success of its debut Hybrid Tier 1 Securities offer, allowing it to once again be the first in issuing innovative capital instruments."
The offering is the first hybrid Tier 1 capital issue from a Philippine bank after the BSP passed new regulations allowing such debt to count as part of core capital in December 2005. The BSP had approved this type of instrument to help the country’s banks address new global banking and accounting standards. "Metrobank has earmarked the issue to strengthen its capital base in light of the bank’s full compliance with new IAS requirements. This will also better position the bank to take advantage of any opportunities that may arise," said Abacan.Moody’s rates the securities B2, one notch below the bank rating of B1 which is also the sovereign ceiling.
UBS Investment Bank was sole bookrunner and sole lead manager for the transaction.Metrobank is the Philippines’ largest bank with consolidated assets of P586.5 billion as of Dec. 29, 2005. The bank enjoys an extensive local distribution of more than 560 branches, as well as a global presence with 12 international branches and representative offices in six countries. - with Ted Torres