PNB raises P6.5 B from sale of debt notes

Philippine National Bank raised P6.5 billion by selling 10-year debt notes qualifying as tier 2 or supplementary capital.

The bank upsized the offering from the original target of P5.5 billion and shortened the offering period given brisk demand for the tier 2 notes.

The coupon rate was fixed at 6.75 percent per annum until the maturity of the notes in 2021, right within the earlier target range of 6.5-7 percent. PNB has the right to redeem the notes after the end of the fifth year, subject to certain regulatory conditions.

“We are pleased with the success of this landmark issuance.  We believe that the volume of demand for the PNB tier 2 notes demonstrated the investors’ continuing confidence in PNB,” said PNB executive vice president and head of treasury group Horacio Cebrero III.

Proceeds will be used to refinance PNB’s P5.5 billion tier 2 notes that PNB has the option to redeem by August 2011.  The balance will be used to finance asset growth and boost capital base.

ING Bank Manila branch acted as lead manager and sole bookrunner for the issue. First Metro Insurance Corp. and Multinational Investment Bancorporation were selling agents while PNB, PNB Capital and Investment Corp. and Allied Banking Corp. were limited selling agents.

PNB has authority from the central bank to issue up to P10 billion for a period of one year but the bank plans to raise the remainder in succeeding months. The bank has chosen to raise fresh funds through a tier 2 offering instead of a tier1 or core capital issuance because the latter is deemed more expensive and will cause dilution to shareholders.

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