Lead manager UBS priced a $130 million 10 non-call five transaction for Metrobank on Tuesday. The lower tier 2 came the same day that Moody's changed its outlook on the Philippines from stable to negative. However, given the news had been expected by the market for some time, spreads only widened about 5bp to 10bp and the Ba1-rated bank's order book stood firm at two times covered.
Pricing of the deal came at 98.937% on a coupon of 8.375% to yield 8.625% or 564bp over the interpolated Treasury curve. At this level, it came flat to the bank's most recent sub debt offering, which priced last November and is currently yielding about 8.2%.
Yet whereas the $125 million 8.5% November deal was able to clear the market at a premium of 105bp to the sovereign curve, the new deal has come about 200bp over. This is because both the sub debt sector and corporate spreads have underperformed the sovereign all year.
This is particularly the case for the former Metrobank deal, which never really bedded down in the secondary market as it was followed by a poorly handled sovereign deal only a few days after launch.
A total of 43 accounts participated in the new deal, similar to last November when 49 were counted. About half of the book were also said to be returning for a second time.
By geography, the book split 39% Philippines, 34% Singapore, 16% Hong Kong, 10% Europe and 1% other. By investor type, private banks took 48%, banks 34%, asset managers 14% and insurance companies 4%.
Metrobank's rationale for another deal was to re-finance its debut subordinated debt issue, which was issued on a private placement basis two years ago and carries a 9% coupon. Because the original deal was completed before the central bank issued new guidelines on regulatory capital last year, it also confers no capital benefit to the bank.
