PinoyBusiness.ORG – Home

The Land Bank of the Philippines (LandBank) initially intended to offer only P3 billion of unsecured subordinated notes in order to raise additional capital. But because of strong demand, the bank increased the deal size from the initial figure to the maximum amount allowed by the Bangko Sentral ng Pilipinas (BSP) to raise.

And from the increased volume of notes, the state-owned LandBank was able to raised P6.9 billion in fresh capital, more than double of what it had initially offered to investors. The notes carry a coupon rate of 7.25 percent per annum, 75 basis points above the benchmark rate, which was at 6.5417 percent at pricing date. Said notes will be issued on June 9.

LandBank president and chief executive officer Gilda Pico said, “We are extremely please with the outcome of the transaction, as it provides us with new capital and augments our lending programs in fulfillment of our mandate towards countryside development.”

Executive vice president for institutional banking and subsidiaries sector Cecilia Borromeo said the offering was a huge success in the current market conditions and despite competing offers from other corporate borrowers.

The proceeds qualify as Tier 2 and will increase the bank’s capital adequacy ratio to 17.3 percent from 14.9 percent currently. It is said to be the largest Tier 2 notes issuance so far this year.

Acting as sole arranger and selling agent for the transaction was Deutsche Bank AG-Manila branch, who was also the arranger in previous $150-million Tier 2 notes offering by LandBank in October 2006. Other selling agents for the transaction were Development Bank of the Philippines and Multinational Investment Bancorporation, which also acted as the market maker for secondary sales.

LandBank currently ranks fourth-biggest bank in terms of assets, loans and deposits. It posted a net income of P1.7 billion for the first quarter, 40-percent higher than the P1.2 billion income for the same period last year.