Yuchengco-led Rizal Commercial Banking Corporation marked a successful return to the U.S. dollar debt markets, raising $400 million after the pricing of its 5-year Senior Unsecured Fixed Rate Sustainability Bonds.
In a disclosure to the Philippine Stock Exchange, the bank said the sustainability bond issuance will be via a drawdown under its $3-billion Medium Term Note Program.
The Notes, rated Baa3 by Moody's, will be issued at 99.543 with a coupon of 5.500 percent per annum and a maturity date of January 18, 2029. The Notes will be issued under the Sustainable Finance Framework of RCBC.
Issued with denominations of $200,000 and increments of US$1,000 thereafter, the Notes will settle on January 17, 2024 and will be listed on the Singapore Exchange (SGX), similar to the Bank's other two outstanding USD-denominated bonds.
Capitalizing on the conducive market backdrop, the Bank announced a mandate for a potential USD Sustainability Bond transaction on January 8, 2024, and conducted a series of fixed income investor calls throughout the day.
Following one day of collecting investor feedback post the fixed income investor calls, the bank released terms and initial price guidance for a new 5-year and 1-day bond on 10 January 2024, at a spread of 195 bps over the 5-year U.S. Treasury yield.
The transaction saw strong interest from a wide range of high quality Asian and European investors, which allowed the Bank to tighten final price guidance to 165 bps over the 5-year Treasury yield.
The Notes eventually priced at a spread of 165 bps over the 5-year U.S, Treasury yield, representing price tightening of 30 bps from initial price guidance.
It is worth noting that the final orderbook was 5.9 times oversubscribed at $2,3 billion, with orders from more than 164 accounts — clearly reflecting global investors' continued confidence in RCBC and their positive outlook on the credit.
The orderbook was well diversified with 78 percent allocated to asset managers, 13 percent to banks, 6 percent to official institutions, insurance companies, pension funds, and 3 percent to private banks, security firms, brokers.
The net proceeds from the issue of the Notes will be applied by RCBC to support and finance or refinance RCBC's loans to customers or its own operating activities in eligible green and social categories as defined in RCBC's Sustainable Finance Framework.
Sustainalytics has provided a second party opinion on RCBC's Sustainable Finance Framework and has concluded that the eligible categories for the use of proceeds are aligned with those recognized by the Green Bond Principles 2018, the Social Bond Principles 2018 and the Sustainability Bond Guidelines 2018, administered by the International Capital Markets Association and the ASEAN Green Bond Standards, the ASEAN Capital Markets Forum.
Australia and New Zealand Banking Group Limited, Citigroup Global Markets Limited and SMBC Nikko Securities (Hong Kong) Limited acted as Joint Bookrunners for the drawdown.