Security Bank raises $300M via five-year fixed rate note facility

SECURITY BANK Corp. raised $300 million through a senior unsecured note drawdown to expand its funding base and extend term liabilities.

In a disclosure to the stock exchange on Wednesday, the listed lender said it raised $300 million from its five-year senior unsecured fixed rate notes which carry a coupon of 4.5%.

The capital raising activity marked the bank’s maiden drawdown from its $1-billion mediumterm note program established last month.

The transaction is expected to be settled on Sept. 24 and will be listed on the Singapore Stock Exchange.

The notes are expected to have an issue rating of Baa2 with debt watcher Moody’s Investors Service, a notch above the minimum investment grade.

“Proceeds of the notes will be used to extend term liabilities, expand funding base, improve liquidity gaps [and] fund investment and other general corporate purposes,” Security Bank said in the disclosure.

The offering was 3.7 times oversubscribed, fetching tenders totalling $1.1 billion. About 73% of the order book was allocated to Asia and 27% in Europe, the bank said.

By investor type, 55% were allocated to global fund and asset managers, 20% to insurers and the rest to banks, private lenders and other investors.

Citigroup, CLSA, MUFG and UBS are the joint bookrunners for the transaction.

The offshore bond offering came after road show meetings conducted by Security Bank in London, Hong Kong and Singapore earlier this month.

In April, the lender raised P5.8 billion through long-term negotiable certificates of time deposit, above the initial P5 billion it intended to offer.

Local banks have been conducting various fundraising activities ahead of tighter risk management requirement by the central bank which will take effect next year under the international Basel 3 standards.

Last month, Bank of the Philippine Islands raised $600 million through a drawdown from its $2-billion note program, which fetched a 4.25% coupon.

Philippine National Bank and Rizal Commercial Banking Corp. have also tapped the foreign debt market this year, raising $300 million and $150 million, respectively, from their own medium-term note facilities.

Security Bank booked a net income of P4.3 billion in the first semester, down 18% a year ago primarily due to a continued decline in trading gains.

Shares in Security Bank closed at P169 apiece on Wednesday, down P6 or 3.43% from the previous day’s finish of P175 each.