Security Bank mulls P10-B bonds

MANILA, Philippines - Security Banking Corp. (SECB) plans to raise around P10 billion through the issuance of Basel III-compliant Tier 2 bonds, the bank told the Philippine Stock Exchange (PSE).

SECB said the Tier 2 bonds would be either peso or US- dollar denominated, with a tenor of 10 years, with the bank having the option to redeem the bonds on the fifth year.

The bank said the bond, which has a loss absorption feature, will be compliant with Basel III global banking standards.

SECB the pricing and offering period will depend on market conditions and the date of Bangko Sentral ng Pilipinas (BSP) approval.

The Tier 2 bond issuance is part of the bank’s proactive capital and balance sheet management.

In order to sustain its healthy Basel III total capital adequacy ratio and support continued business expansion, the bank said it will be capitalizing on the markets’ robust liquidity and will be addressing the demand for viable alternative investment instruments.

Last December, the bank redeemed the Basel II compliant Lower Tier 2 subordinated notes worth P3 billion.

As of end-2013, the bank’s basel II total capital adequacy ratio (CAR) was 15.5 percent and Tier 1 CAR was 15.1 percent, which were well above the BSP’s minimum requirements.

The SECB’s board also approved the declaration of a regular semestral cash dividend of 50 centavos per share and a special cash dividend of 50 centavos per share on the outstanding capital stock of the bank, for a total cash dividend of P1 per share for the semester.

The record date and payment date will be determined after receipt of BSP approval on the cash dividend declaration. This will be the bank’s 25th consecutive cash dividend issuance to shareholders.