Philippines mandates as Metrobank prices

The Republic of the Philippines mandates three banks for a $500 million offering as the country's first public subordinated debt issue is priced.

After requesting that banks submit ideas for a new dollar bond, the Department of Treasury mandated three houses yesterday (Wednesday) for a $500 million 10-year deal. HSBC, Salomon Smith Barney and UBS Warburg won the books for an offering, which may launch as soon as today.

In the meantime, Metrobank successfully completed the Republic's first public subordinated debt transaction yesterday under the lead of UBS Warburg.

Investors have traditionally done well from Asian sub debt deals and this one was underpinned by the same private banking demand that has helped its recent predecessors from Indonesia, as well as strong onshore demand.

A $125 million lower tier 2 transaction with a 10 non-call five structure was priced at 99.50% with a semi-annual coupon of 8.5% to yield 8.625% or 578bp over Treasuries. If the Ba1-rated deal is not called, the spread will step up to 867bp. Fees total 1.125%.

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