RCBC issues $300 million in additional Tier 1 notes

RIZAL COMMERCIAL Banking Corp. (RCBC) on Thursday issued $300 million of additional Tier 1 securities as it looks to boost its capital.

The bank priced the Reg S-only dollar-denominated five-year non-cumulative subordinated additional Tier 1 securities at 6.5%, it said in a disclosure on Monday.

“The proceeds of the offering are intended to be used to (1) support and finance medium-term to long-term asset growth and other general corporate purposes; and (2) comply with and maintain sufficient buffers above the minimum capital thresholds required by the BSP (Bangko Sentral ng Pilipinas),” RCBC said.

The bank said this is its first additional Tier 1 note issue out of the country.

Orders for the notes peaked at more than $825 million for its initial guidance of 6.75% and demand from 57 accounts was at over $600 million for its final price guidance level of 6.5%, RCBC said.

The offering saw orders mainly from asset managers (59%), followed by private banks (24%) and hedge funds (17%).

“By geography, Asian accounts allocated 79% and Europe accounts 21%,” RCBC added.

Last week, Moody’s Investors Service gave the issuance a Ba3 rating, citing its permanent write-down feature.

Credit Suisse Group AG served as the sole global coordinator and sole bookrunner for the transaction.

In July, the Yuchengco-led lender sold P16.616 billion worth of two-year bonds priced at 3.25%. Proceeds from the issuance are meant to support the bank’s activities and refinance debt obligations.

RCBC’s net profit declined 40.9% year on year to P802 million in the April to June period from P1.356 billion dragged by higher loan loss provisioning which offset better trading gains. Meanwhile, its net earnings in the first semester improved 17% to P3.11 billion.

RCBC’s shares finished trading at P16.20 apiece on Monday, down by 20 centavos or by 1.22% from its previous close. — Luz Wendy T. Noble