PNB raises $300M in debt market comeback

Philippine National Bank (PNB) has raised $300 million from its first offshore bond program in five years, allowing the Lucio Tan-led group to beef up its coffers for financing needs amid lower interest rates.

PNB said in a regulatory filing on Thursday that the bonds, which will mature in five years, had a fixed coupon rate of 4.85 percent. This represents the interest payment that lenders will receive until the bond matures.

The offer was 3.6 times oversubscribed, with demand from global investors reaching $1.1 billion, according to PNB.

“We believe this is an ideal time to return to the market, given the reduction in interest rates complemented by the bank’s improved core banking activities,” PNB chief financial officer Francis Albalate said in a statement.

This was announced as the Bangko Sentral ng Pilipinas implemented another 25-basis-point reduction in its benchmark interest rate, which now stands at 6 percent.

Policy rate cuts typically make fixed-income securities, such as bonds, more attractive because these signal better economic conditions, thus boosting investor confidence.

Geographically, PNB said 89 percent of investors came from the Asia-Pacific region, while 11 percent were from Europe, the Middle East and Africa.

In terms of investor type, 67 percent were asset managers and hedge funds, 23 percent were banks, and 10 percent were private banks, broker dealers and others.

ING and JP Morgan were tapped as joint lead managers and bookrunners, while PNB Capital was the sole global coordinator.

The bond offer is part of PNB’s Regulation S $2-billion euro medium-term note (EMTN) program.

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Regulation S notes refer to debt securities offered and sold outside the United States. Its name comes from Regulation S of the US Securities Act of 1933, which stipulates the rules on offers and sales made in other countries.

Meanwhile, EMTNs, which are issued outside the United States and Canada, give issuers the flexibility to tailor their debt issuance to their specific funding needs. It likewise allows companies to tap more international investors, particularly those looking for Euro-denominated debt.

In the first half of the year, PNB’s net income reached P10.3 billion, up by 5.6 percent on gains from its core banking activities.

High interest rates and an increase in loan volume during the period caused an 11-percent uptick in net interest income.