Philippine-based Rizal Commercial Banking Corporation (RCBC) has issued $250 million of senior unsecured notes with a final coupon of 6.25%. The five-year deal, which was priced yesterday evening Hong Kong time, was RCBC's first international bond since 2006.
The yield was fixed at the tight end of the initial guidance of 6.25% to 6.375% and was achieved by attaching a 6.25% coupon and re-offering the bonds at par. The final yield equalled a spread of 388bp over the equivalent US Treasuries. The maturity date was set for February 9, 2015.
The pricing was said to be competitive against the Philippine sovereign curve, with the final yield equalling a spread of 180bp over the sovereign 2015s.The immediate performance of RCBC's five-year notes in the aftermarket was in line with expectations of the arrangers.
The deal was also benchmarked against SM Investments Corporation's (SMIC) $500 million five-year bonds that were issued in September last year. Taking into account the slightly longer maturity, RCBC was said to have come flat versus this leading Philippine conglomerate. At the close of Asian trading Monday, the SMIC 2014s were trading at a 6% yield.
As is a common theme with issues from the Philippines, demand was driven by a strong domestic bid and the lead arrangers on the deal (Citi and Standard Chartered) secured a final order book of $1.1 billion from 60 accounts.
The final distribution left local investors with 40% of the deal and the rest of Asia with 51%. European investors took up the remaining 9%. Among the investor types, retail investors were allocated the greatest proportion, or 43%, while funds received 30%, and banks 23%. The remaining 4% went to others.
There was a lot of interest generated during the roadshow, which consisted of a couple of days of meetings with investors in Singapore and Hong Kong at the end of last week. A banker on the deal attributed the interest to a scarcity value for Philippine issues, due to limited supply of new private sector issuance over the past year. Also, it has been four years since RCBC last came to the international market. Its last deal was a $100 million tier-1 security in 2006.
RCBC is a mid-sized universal bank. It was established in 1960 as a development bank and is now the fifth largest privately owned domestic bank in the Philippines. As of September 30, 2009, RCBC had total assets of Ps268 billion ($5.7 billion) and 334 branches. Moody's rated the senior notes Ba2 and Fitch gave them a BB-.
This is poised to be a busy week for debt issuance as companies try to get their deals out before the Chinese New Year holiday that officially starts on February 14. The Industrial Bank of Korea is expected to price a deal early this morning, which will make it the first issue from Korea in 2010. Indonesia's Star Energy Geothermal (Wayang Windu) ends its roadshow today, while India's Bank of Baroda will hold a final day of investor meetings tomorrow.