PNB raises P6.35B from LTNCDs
PHILIPPINE NATIONAL Bank ( PNB) listed P6.35 billion worth of long- term notes yesterday, joining a host of local firms looking to raise fresh funding amid a low interest rate regime.
The bank owned by Lucio C. Tan has started the offering of new long- term negotiable certificates of time deposit ( LTNCTD) on Thursday at the Philippine Dealing and Exchange Corp. ( PDEx).
The notes mature in 5.5 years and carry a 3.875% annual interest rate to be paid quarterly. The amount represents the third and final tranche for PNB’s P20- billion long- term note offering since November 2016.
LTNCTDs are similar to regular time deposits which offer higher interest rates, but the difference is that these cannot be pre- terminated. Being “negotiable” means that these can be traded at the secondary market prior to maturity date.
The papers are due on April 26, 2023.
“This enables the bank to raise long- term and costeffective funding as and when needed, and at the same time provide suitable investment requirements,” Nelson C. Reyes, PNB executive vice- president and chief financial officer, said during the listing ceremony yesterday in Makati City.
He added the fresh capitalraising initiative will allow the bank to “match funding gaps within our long-term assets and help fund new long-term loans.”
The Hong Kong and Shanghai Banking Corp. and the ING Bank N.V. Manila branch have been tapped as joint lead arrangers, and will also serve as selling agents together with PNB and the Multinational Investment Bancorporation.
PNB’s offering aligns with the bank’s liability management as it would effectively extend the maturity of outstanding debts, while also raising more funds to sustain operations.
The country’s sixth- biggest lender booked P2.7 billion in net income during the first semester, down by 37% from the P4.3- billion income a year ago in the absence of one- off gains.
PNB’s listing brings the total volume of new PDEx listings to P163.493 billion, 73% higher from a year ago. Outstanding listed securities stand at P756.366 billion floated by 44 companies, according to industry data.
Other big banks are also in the process of offering longterm papers to investors. Apart from PNB, the Bank of the Philippine Islands, Security Bank Corp., Union Bank of the Philippines, and the Metropolitan Bank & Trust Co. have rolled out their own fund- raising plans through separate note offerings announced over the past few months.
PDS President and Chief Executive Officer Cesar B. Crisol said he expects more private firms to tap the local debt market to secure fresh funding, noting that LTNCTDs appear to be the most convenient instrument which can be easily tapped by corporates.
“We look forward to bringing this momentum to next year as the capital markets face our growing economy’s continuing requirements for business expansion as well as infrastructure financing,” Mr. Crisol said.
He added market players see the early fourth quarter as an opportune time to borrow amid ample domestic liquidity and in anticipation of higher interest rates.
PNB’s Mr. Reyes said separately that firms may be “locking in the interest costs” ahead of expectations that the United States Federal Reserve will introduce another rate increase by December.
PNB shares closed 0.52% or 30 centavos higher at P58.20 each on Thursday.