EAST WEST Banking Corp. (EastWest Bank) expects to offer the first tranche of its P10-billion fixed-rate bond program in the third quarter, as it seeks to diversify its funding sources.
EastWest Bank Senior Executive Vice-President Rafael S. Algarra, Jr. said in an interview that the Gotianun-led lender is looking at offering its maiden peso-denominated bonds next quarter.
“We’re still looking at the timing. We’re looking at it some time definitely this year. Hopefully, we can do it probably by the third quarter of the year,” Mr. Algarra said.
Last week, EastWest Bank said in a regulatory filing that its board of directors approved the issuance of up to P10 billion in bonds to be issued in one or more tranches, adding that the timing of the issuance will be subject to market conditions.
Before issuing the bonds, Mr. Algarra said the bank will have to look at market appetite as well as the timing of other firms that are also issuing debt instruments.
“You want to put it in a position where it doesn’t conflict with other issuances in the market,” he said. “The rates should be also reasonable for us.”
The official added that EastWest Bank will raise funds through the fixed-rate bonds to diversify its funding sources.
“We expect recovery in the lending market as the cut in reserves and interest rates would probably spur some growth, especially on the loan side of business,” Mr. Algarra said.
“As the business expands, we would need funding… What we want to do is to have a good stable balance sheet and one way to…have stable funding is to have something on the longer end of your liabilities.”
Lenders can now raise fresh funds through bonds and commercial papers after the central bank last year relaxed its rules by doing away with having to secure approval from them.
In June 2018, EastWest Bank raised P2.45 billion from the first tranche of its P15-billion long-term negotiable certificates of deposit program. The 5.5-year notes carry an interest rate of 4.625% to be paid quarterly until December 2023.
EastWest Bank posted a net income of P1.3 billion in the first three months of the year, up 36% from the same period a year ago, driven by improved trading income, lower credit costs and the resumption of the teachers’ lending program of the bank’s rural banking arm.
The bank’s shares closed at P11.62 apiece on Tuesday, down eight centavos or 0.68%. — Karl Angelo N. Vidal