PNB says P6-B tier 2 issue oversubscribed

ABS-CBN News

Posted at Jun 23 2008 04:14 PM | Updated as of Jun 24 2008 12:14 AM

The Philippine National Bank (PNB) said Monday it issued P6 billion worth of unsecured subordinated debt or tier 2 capital. The offer was three times oversubscribed.

The notes carry a coupon rate of 8.50 percent, 45 basis points below the government's benchmark rates, PNB said.

Strong investor demand prompted the PNB to increase the issue size to P6.0 billion, the maximum approved by the central bank, from the original P3.0 billion. The bank also ended the offer on June 12, earlier than the planned June 19 close.

PNB will use the proceeds to refinance its outstanding tier 2 notes, callable in February next year and to further strengthen its capital base. The issue will improve PNB's capital adequacy ration from 19.0 percent to about 22.0 percent, it said.

"We are extremely pleased with the outcome of the transaction as it provides us with a new source of capital ahead of our planned merger with Allied Banking Corp.," said PNB president and chief executive officer Omar Byron Mier.

PNB is set to merge with another Tan-controlled bank, Allied Bank, by the third quarter of this year to create the country's fourth-largest bank.

During the first quarter of 2008, PNB posted a net income of P457 million, up 48.0 percent from P306 million in the same quarter a year before.