RCBC retires P10 billion debt ahead of schedule

MANILA, Philippines — Listed Rizal Commercial Banking Corp. (RCBC) has retired P10 billion worth of debt ahead of schedule to save on interest payments.

Ma. Christina Alvarez, first senior vice president and corporate information officer at RCBC, informed the Philippine Stock Exchange (PSE) that the bank has completed the exercise of its call option on the P5.375 billion unsecured subordinated debt qualifying as Basel III Tier-2 capital due 2024.

The notes due September 2024 were issued in June 2014.

Banks have been redeeming debt instruments issued a few years ago to avoid paying higher interest rate.

The bank has been tapping the onshore and offshore debt markets to raise needed funds to bankroll its expansion as well as to strengthen its balance sheet.

The publicly-held bank raised P23 billion so far this year via the issuance of bonds. It raised P15 billion via the issuance of the first peso-denominated Association of Southeast Asian Nations (ASEAN) green bonds in January and another P8 billion from the maiden ASEAN sustainability bonds issued in June.

This prompted RCBC to more than triple its bond and commercial paper program to P100 billion to further strengthen the bank’s regulatory liquidity ratios.

Likewise, the bank returned to the offshore debt market last month via its $300-million bond issuance that was five times oversubscribed. The fund raising activity was part of its $2 billion medium term note program.

The transaction saw strong interest from a wide range of high quality Asian and European investors, allowing RCBC to tighten final price guidance to 170 -175 basis points over the five-year US Treasury yield.

The notes eventually priced at the tight end of price guidance, at a spread of 170 basis points, over the five-year US Treasury yield representing price tightening of 25 basis points from initial guidance.