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Treasury & Capital Markets
Metrobank US$1 billion bond hits milestones
Longest senior dated note, largest non-sovereign bond issuance, tightest credit spreads
Chito Santiago 1 Mar 2024

One of the biggest lenders in the Philippines, Metropolitan Bank & Trust Company (Metrobank), returned to the US dollar bond market after an absence of three-and-a-half years when it priced on February 28 a dual-tranche offering totalling US$1 billion.

The Reg S deal is equally split at US$500 million each with the five-year bond priced at 99.879% with a coupon of 5.375% to offer a yield of 5.403%. This is equivalent to a spread of 110 basis points (bp) over the US treasuries, which was in line with the final price guidance and 30bp tighter than the initial price range in the 110bp area.

The other tranche was for 10 years, which was priced at 99.250% with a coupon of 5.50% and a re-offer yield of 5.599%. This represented a spread of 130bp over the US treasuries, which was also in line with the final price guidance and 30bp inside of the initial guidance in the 160bp area.

The transaction established a number of milestones for Metrobank: the longest senior dated note by a private sector bank in the Philippines, the largest non-sovereign bond issuance of US$1 billion and the tightest-ever credit spreads on the five-year tranche among the non-sovereign Philippine issuers.

The deal generated strong investor demand with the final order book amounting to US$5.6 billion. In terms of geographical allocation, 86% of the investors were from Asia-Pacific and 14% from Europe, the Middle East and Africa. By type of investors, fund managers bought the bulk of the paper with 73%, followed by banks and financial institutions with 14%, and insurance companies, corporates and private banks, 13%.

Metrobank last tapped the US dollar bond market in July 2020 when it raised US$500 million for 5.5 years, paying a fixed-rate coupon of 2.125%.

The latest bond issue was drawn from the bank’s US$2 billion medium-term note programme with the proceeds earmarked for general corporate purposes to fund its key growth initiatives. BofA Securities and UBS acted as the joint global coordinators for the transaction, as well as joint bookrunners, along with First Metro Investment Corporation and MUFG Bank.

Metrobank achieved record earnings of 42.2 billion Philippine pesos (US$752.90 million) in 2023, representing a year-on-year increase of 28.9%. This translated to a return on equity of 12.5%, up from 10.3% in 2022.

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