Metrobank Subordinated Note Issue
October 3, 2007 by prometheus
Metrobank is issuing subordinated notes otherwise known as lower tier-2 notes as part of their capital build up. The issue has a tenor of 10 years callable by the issuer after 5 years which means Metrobank may redeem the note after 5 years. The note carries a coupon of 7% payable quarterly. If they do not redeem the note, there is a step up feature which will add 2.44% to 80% of the prevailing interest rate after 5 years. The issue size is PhP 5.0 Billion. The co-arrangers are ING Bank and Standard Chartered. The selling agents include the arranging banks, Metrobank, First Metro Investment Corp., and Multinational Investment Bancorporation. The minimum amount for investment is Php 500,000.00 with increments of php 100,000.00 after.
Qualified investors who are tax-exempt are individuals who are Filipino citizens, resident aliens, non-resident aliens who do business in the country, and tax-exempt institutions. All other investors are taxable according to the applicable tax law.
For those who are wondering, this type of issue is fairly popular these days. Since it is a subordinated note it is last in line among the bank's creditors in case the bank fails and its assets liquidated. However, it has priority over the banks shareholders. Presently, the bank has 2 outstanding issues of this type but both are dollar denominated and 1 will be redeemed already.
do you recommend investing into this?
if you are the wife of the great dragon probably not since you can get bigger returns from the stock market!
seriously, the issuer is the biggest bank in the country and at 7.00% net, it offers a a compelling yield over existing benchmark issues. the quarterly coupon payment is good for those lloking for regular cash flows and with MIB as market maker, it ensures that the issue is liquid and negotiable for those who wish to dispose of it prior to the call date. depending on the type of investor you are (conservative, aggressive,etc.) this issue should be good for your portfolio.
thanks for the compliment re: dragon… last question, this is not covered by pdic right? thanks
no it is not. that is why it is important to consider the creditworthiness of the issue.