RCBC taps foreign debt markets for fund raising
CAPITALIZING ON a liquid market and appetite for emerging market assets, Yuchengco-led Rizal Commercial Banking Corp. (RCBC) yesterday launched a US dollar-denominated note issue to raise fresh funds for expansion and lending.
In a disclosure to the stock exchange, RCBC said: “[RCBC] will be issuing US-dollar senior notes.”
The issuance is part of the Euro Medium-Term Note Program with issue size of $1 billion and tenor of five to seven years approved by the RCBC board in September 2011.
A euro medium term note is a debt instrument that allows issuers to raise money from foreign capital markets outside the US and Canada.
RCBC Senior Vice President Raul Victor B. Tan, in a phone interview, said “we started to gather orders [yesterday] and we expect to set the price, allocate orders and probably close our books [today].”
“We chose to tap the markets now after we saw how markets recovered quickly after S&P’s recent downgrade of euro zone economies and we believe there is a high volume of liquidity in the market,” he added.
The notes were offered to investors in Asian and Europe, Mr. Tan said.
Proceeds of the debt issuance will be used to finance RCBC’s general banking lending activities.
Asked how much RCBC eyes from the offering, Mr. Tan declined to specify an amount, but said “it will not be a benchmark volume,” meaning not larger than $500 million.
The notes will be listed on the Singapore Stock Exchange and have a tenor of five years and one day. They are unsecured senior debt, which means their holders will be paid ahead of those holding subordinated debt.
RCBC has chosen Standard Chartered Bank as lead manager for the debt issuance.
Allen & Overy is the international legal counsel while Romulo Mabanta Buenaventura Sayoc & De Los Angeles is the domestic legal counsel.
Punongbayan & Araullo has been hired as the program’s auditor.
Meanwhile, Fitch Ratings and Moody’s Investors Service yesterday assigned “BB-(exp)” and “Ba2,” respectively, to the dollar-denominated notes.
In a statement, Alfred Chan, Fitch Ratings director for financial institutions, said the rating is the same as RCBC’s long-term foreign currency issuer default rating.
A “BB-” rating means RCBC is not likely to default on its obligations, but is still subject to substantial credit risk due to ongoing uncertainties.
Moody’s, in a separate statement, said the Ba2 rating “recognizes the bank’s moderate capability to service its debt obligations.”
RCBC shares closed at P30 apiece yesterday, 0.4975% or 15 centavos lower than a day earlier. -- Ann Rozainne R. Gregorio
(As published in BusinessWorld, 18 January 2012. Articles about this development also appeared in the Philippine Star, Manila Standard Today and ZamboTimes Online, 18 January 2012.)