RCBC issues first US dollar sustainability bonds
Final order book 5x oversubscribed reflecting investors’ positive outlook on RCBC credit
RIZAL Commercial Banking Corporation (RCBC) continued its pioneering sustainable financing efforts in the Philippines as it priced on September 4 the first US dollar sustainability bonds out of this market amounting to US$300 million.
The Reg S five-year deal was priced at 99.75% with a coupon of 3% to offer a yield of 3.05%. This represented a spread of 170bp over the US treasuries, or at the tight end of the final price guidance of between 170bp and 175bp.
The RCBC trade came at the heels of another Philippine bank, the Bank of the Philippine Island, pricing its first US dollar green bond on September 3 with a similar deal size of US$300 million.
In executing the transaction, RCBC capitalized on the conducive market backdrop as it announced the transaction during the Asia morning of September 4. The deal arrangers – Bank of America Merrill Lynch, Citi, ING and SMC Nikko – released the terms and initial price guidance for a new five-year bond at a spread of 195bp over the US treasuries. ING also acted as the sole sustainability bond structurer for the transaction.
The offering generated a strong demand from a wide range of high quality Asian and European investors, which enabled the bank to tighten the final price guidance to between 170bp and 175bp – eventually printing the deal at the tight end. The final order book was 5x oversubscribed with demand from more than 100 accounts, reflecting the global investors’ positive outlook on the RCBC credit. By type of investors, asset and fund managers accounted for 74% of the bonds, while bank treasury and insurance companies bought 18%, and corporates, private banks and other investors took 8%.
The offering represented an investor diversification for RCBC as the bank senior executive vice-president and treasurer Horacio Cebrero III points out. “RCBC is proud of the interest this issuance received from SRI (socially responsible investing) investors, further strengthening our resolve to promote sustainable practices and support our clients’ sustainability goals,” he adds.
The net proceeds from the bonds, which were drawn under RCBC’s US$2 billion medium-term note programme, will be used to support and finance and/or refinance the bank’s loans to customers or its own operating activities in eligible green and social categories as defined in its sustainable finance framework.
The US dollar issuance followed RCBC’s first Asean sustainability bond local currency offering in the Philippines amounting to 8 billion pesos (US$154 million) in May this year and its first Asean green bond amounting to 15 billion pesos in January.
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 of the sustainability bonds are aligned with those recognized by the Green Bond Principles 2018, the Social Bond Principles 2018 and the Sustainability Bond Guidelines 2018. It considers that the eligible green and social projects, as well as lending activities as defined in the framework will contribute to reducing environmental footprint in the Philippines, advancing employment generation and improving access to essential services of vulnerable groups in the Philippines.
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