Market interest high on SBC Basel lll Compliant Tier 2 Notes

Security Bank Corporation (PSE: SECB) expects to exceed market interest and acceptance following the public offer of its Basel III Compliant Tier 2 Notes. The Notes will have an aggregate principal amount of up to P10 billion. 

The Notes were recently launched and offered to investors in Visayas and Mindanao. “The interest of the public offering in Cebu and Davao highlights the investors’ preference towards the Notes that are offered by Security Bank. Despite the most recent increase in interest rates by the Bangko Sentral ng Pilipinas, we believe that market expectance in Metro Manila would also likewise exceed expectations,” Raul Martin A. Pedro, Senior Vice President and Treasurer of Security Bank said.

The Notes may be purchased in denominations of PHP 500,000 and in increments of PHP 100,000. The interest on the Notes will be paid quarterly. It will have a term of 10 years with an Issuer’s call option after five years. The issuance is in line with the more prudent capital regulations implemented by the Bangko Sentral since January 2014 following the stricter Basel III global standard for banks.

Security Bank is issuing the Notes to further increase its total Capital Adequacy Ratio in order to support the continuing growth of the Bank’s financial assets. The Bank is the 8th largest in total assets among private domestic universal banks in the country with total assets of PHP 377 billion, 7th largest in loans with loan portfolio of PHP 166 billion, and 8th largest in capital at PHP 42 billion as of March 31, 2014. The Bank posted 17% year-on-year growth in net income to PHP 1.43 billion in the first quarter of 2014, with a return on shareholders’ equity of 13.8% which is among the highest in the industry, and healthy Basel 3 capital ratios of 14% Total CAR and 13.5% Tier 1 CAR. 

Security Bank has mandated Deutsche Bank, The Hongkong and Shanghai Banking Corporation Limited, and Standard Chartered Bank as the Joint Lead Arrangers of the offering and as Selling Agents. Security Bank will be a Limited Selling Agent and Multinational Investment Bancorporation will be the Market Maker and a Selling Agent. The Trust Services Group of the Development Bank of the Philippines will be the Public Trustee.

The public offer period runs from June 19 to July 3, 2014, with issue date onJuly 11, 2014. The Bank said that it has reserved the right to close the offer period earlier.

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