Landbank’s ₧5B debt papers oversubscribed by 5x
THE recently-listed P5-billion maiden offering of sustainability bonds by the Land Bank of the Philippines was met with robust demand during the offer period.
“Amidst the backdrop of a recovering economic environment, we are pleased with the strong investor confidence in Landbank’s stable financial position,” LandBank President and CEO Cecilia C. Borromeo was quoted in a statement as saying. “The strong interest is also a clear reflection of the conscious and growing demand for environmental and socially responsible programs and initiatives that Landbank promotes.”
The issuance was oversubscribed by more than five times, with total bids reaching P16.6 billion. This resulted in the total issue size increasing to P5 billion from P3 billion.
Landbank closed the offer period on October 26—the first day of offering—after being welcomed by an “overwhelming” market demand.
The bonds carry a coupon rate of 2.5872 percent annually and have a tenor of two years. Landbank said the minimum investment amount is P50,000 and in multiples of P10,000 thereafter.
The state-run bank tapped Standard Chartered Bank to be the sole lead arranger and bookrunner of the transaction. Both banks are the selling agents.
The proceeds from the transaction will finance loan programs supporting green and social projects identified in the bank’s sustainable finance framework.
Among the green projects are climate change mitigation and adaptation, natural resource and biodiversity conservation and pollution prevention and control.
Meanwhile, Landbank cited programs for basic infrastructure, food security, essential services, affordable housing, employment generation and food security as some of the social projects.
Recentl y, Landbank announced that it is offering online placements for “Premyo Bonds Para sa Bayan 2” launched by the Bureau of the Treasury.
The low-risk government securities have an interest rate of 1.25 percent annually, which is subject to 20-percent final tax.
“We have seen a growing public interest for the Premyo Bonds, and by making available online channels, more Filipinos both here and abroad will be able invest in government securities,” Borromeo said.
The bank is selling the Premyo Bonds over the counter at all its branches.
The Landbank said it is also giving Filipinos abroad a platform to participate in the Premyo Bonds offering through the mobile banking application of the Overseas Filipino Bank (Ofbank), the bank’s digitalonly branchless bank subsidiary.
Through the Ofbank mobile banking application (app), Filipinos across the world may invest in the Premyo Bonds in as fast as five minutes or less through their smartphones, the bank said.
The bank said it app accepts placements of up to P500,000 per transaction. For investments more than this amount, investors may do multiple transactions as long as each transaction is up to P500,000 only, the Landbank said.
Similar to those issued last year, the second Premyo Bonds are sold at only P500 each. These low-risk government securities have an interest rate of 1.25 percent per annum, subject to a 20 percent final tax.
The offer period for the Premyo Bonds 2 will run until December 11, 2020, with settlement on December 16. Proceeds from the issuance will be used to fund government programs on the response for the Covid-19 crisis, education and healthcare, among others, the Landbank said.
On top of quarterly interest payments, investors of Premyo Bonds 2 will have the chance to win cash rewards of over P1 million, as well as brand new cars during the quarterly rewards draws. Each P500 investment entitles the eligible bondholder one bond unit with an electronic rewards number, which will serve as one entry in the quarterly draws.
National Treasurer Rosalia V. De Leon said that the Premyo Bonds issuance aims to familiarize more Filipinos with government securities, while getting them into the habit of investing and helping the government expand its financing footprint in the retail sector. De Leon added that investors with P20,000 or below will be qualified for a special rewards draw with 20 winners of P50,000 each per quarter.