Metrobank concluded its offering of dual-tranche, 5-year, and 10-year US dollar-denominated notes, raising a landmark $1 billion amid overwhelming demand.
The 5-year and 10-year bonds were priced at 110 basis points and 130 basis points above the benchmark US Treasury notes, carrying fixed coupon rates of 5.375% and 5.5%, respectively. The final order book was over 11 times oversubscribed, reaching $5.6 billion from investors globally.
Metrobank is the first private bank to issue a long-dated 10-year bond. Moody’s gave the 5- and 10-year bonds an investment grade rating of Baa2, at par with the Philippine government’s sovereign dollar debt.
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“We are positively overwhelmed with the high interest we received from global investors for this issuance,” said Fabian Dee, president of Metrobank. “It shows their strong confidence in Metrobank’s credit and track record in the Philippines. This offering will fund the Bank’s key growth initiatives as we continuously develop innovative financial solutions to serve our clients.”
International capital markets
This issuance set several records: the longest senior dated note by a private sector bank in the Philippines, the largest non-sovereign note issuance of $1 billion, and the tightest ever credit spreads on the 5-year tranche among non-sovereign Philippine issuers. Geographically, 86% of investors came from Asia Pacific (APAC) and 14% from Europe, the Middle East, and Africa (EMEA). By investor type, 73% was allocated to fund managers, 14% to banks/financial institutions, and the remaining 13% to insurers, corporations, and private banks.
The proceeds of the bond issuance will be used to diversify the bank’s funding sources and establish a benchmark for Philippine bank credit in the international capital markets.
Bank of America Securities and UBS were the Joint Global Coordinators and Joint Bookrunners for the transaction, while MUFG Securities and First Metro Investment Corp. acted as Joint Bookrunners.
Regular dividend
This issuance is part of the Bank’s $2 nillion Medium Term Note Program approved by its Board of Directors on March 22, 2017. Metrobank last tapped the international bond market in July 2020 when it raised $500 million from the issuance of 5.5-year bonds, which carried a fixed coupon of 2.125%, payable semi-annually.
In 2023, Metrobank posted record earnings of P42.2 billion, a 28.9% increase year-on-year. This translated to a return on equity (ROE) of 12.5%, higher than 10.3% in 2022. The Common Equity Tier 1 (CET1) ratio of 17.4% is well above the minimum regulatory requirement. The Bank’s strong profitability and substantial capital base prompted the Board of Directors to approve a total cash dividend of P5 per share for the year. The regular dividend was raised from P1.60 to P3 per share, to be paid out on a semi-annual basis at P1.50 per share. In addition, a special cash dividend of P2 per share was also declared.