PNB doubles euro notes issue to $2 billion

MANILA, Philippines — Lucio Tan-led Philippine National Bank (PNB) is turning to the offshore debt market more to raise much needed funds to bankroll its expansion program as it decided to double the size of its euro medium term note program to $2 billion.

In a disclosure to the Philippine Stock Exchange, the country’s fifth largest bank in terms of assets said its board of directors approved the increase of its euro medium term note program from $1 billion to $2 billion.

The listed bank is raising at least $300 million from the offshore debt market to beef up its capital base and bankroll its expansion program. It has an option to upsize the proposed fund raising program depending on the demand.

PNB president and chief executive officer Jose Arnulfo Veloso said in a text message to The STAR the bank continues to focus on building up its asset base.

“The proceeds are going to be used to help fund the growth,” Veloso said.

In the onshore debt market, the bank has established a peso bond and commercial paper program amounting to P100 billion to be issued in one or more tranches.

It successfully raised P13.87 billion via the maiden offering of fixed-rate peso-denominated bonds early last month. The two-year bonds due 2021 was three times oversubscribed as the original volume of the issuance was only P5 billion.

The fund raising activity attracted huge interest from retail investors with around 6,200 individuals participating in the bond offering.

Over the past century, PNB has been very active in offering investment opportunities to customers.

Aside from business expansion, Veloso had said the bond issuance is part of the bank’s efforts to diversify its funding sources to meet the financial needs of growing customer base.

“We look forward to tapping the capital markets in a variety of formats, as we come up with new products to offer to our investors, and embark on a safe aggressive growth,” he said.

Last February, PNB raised P8.22 billion via the issuance of long-term negotiable certificates of time deposits (LTNCDs) due 2024 as part of a series of fundraising activities lined up by the bank.

PNB announced last year it would raise P20 billion through the issuance of LTNCDs to extend the maturity profile of the bank’s liabilities as part of overall liability management.

It is also planning to raise P12 billion through the sale of shares to existing shareholders led by the LT Group of Companies. Proceeds of the planned stock rights offering would be used to strengthen its common equity Tier 1 and enable the bank to sustain its asset growth.

PNB also recently closed and signed a $250 million three-year syndicated term loan facility with a large group of international and regional Japanese banks.

PNB’s total resources reached P1.03 trillion at the end of March 2019, up P176 billion or 21 percent compared to year-ago. Its net income jumped 30 percent to P1.9 billion in the first quarter of the year from P1.5 billion in the same quarter last year.