Rizal Commercial Banking Corp. (RCBC), a prominent member of the Yuchengco Group, has expanded its medium-term note (MTN) program from US$3 billion to US$4 billion.
This expansion marks a significant step for the bank as it seeks to diversify its funding sources and better position itself in the competitive global debt market.
In a disclosure to the Philippine Stock Exchange, RCBC announced the appointment of SMBC Nikko Securities (Hong Kong) Ltd. as the program arranger for its expanded MTN program. Through this partnership, the bank aims to streamline its bond issuance process and optimize its capacity to attract both local and international investors.
The MTN program expansion enables the Yuchengco-led bank to issue bonds in foreign currencies. However, the bank emphasized that any such issuance would be subject to favorable market conditions and further strategic planning.
While the exact timing and structure of the upcoming bond issuance remain undetermined, the Yuchengco-led bank’s management expressed confidence that the increased program size aligns with the bank’s long-term objectives and broadens its reach in the offshore debt market.
It can be recalled that in July this year, Moody’s predicted that RCBC would face big challenges in sustaining capital in 2024, with the bank anticipated to encounter a significant rise in bad loans over the next 12 to 18 months as it accelerates its growth into riskier retail loans.
The expansion of RCBC’s MTN program follows a successful sustainability note offering earlier in the year.
In January, RCBC raised US$400 million through the issuance of five-year senior unsecured fixed-rate sustainability bonds, generating an enthusiastic response from investors. The offering was significantly oversubscribed, with the final order book reaching US$2.4 billion — 5.9 times the amount raised.
This overwhelming demand underscores international investors’ continued confidence in RCBC’s creditworthiness and the strength of its strategic outlook.
The diversity of investors participating in the January offering highlights RCBC’s broad appeal across financial sectors. Of the total orders received, asset managers accounted for 78 per cent, while banks held 13 per cent. The remaining shares were allocated to official institutions, insurance companies, pension funds, private banks, security firms, and brokers.
RCBC’s alignment with sustainable finance
In a testament to RCBC’s reputation and alignment with sustainable finance, the bonds were structured with an annual coupon rate of 5.5 per cent and issued under the bank’s Sustainable Finance Framework.
RCBC’s Sustainable Finance Framework, which governs the allocation of funds from these bond offerings, focuses on environmental and social impact. Proceeds from the January issuance were earmarked for projects in green and social categories, supporting both the bank’s clients and its own operational initiatives that contribute to sustainable development goals.
By channelling funds into qualified green and social projects, RCBC reinforces its commitment to responsible banking practices and its support for climate and social initiatives.
With this latest expansion of its MTN program, RCBC reaffirms its dedication to maintaining a diversified funding base and bolstering its presence in global financial markets.
The bank’s strategic decision to upsize its bond program reflects a proactive approach to meeting potential future market demands, especially as the financial landscape becomes increasingly competitive and sustainability continues to be a focal point for investors worldwide.
Exploring opportunities in the offshore debt market
As RCBC continues to explore opportunities in the offshore debt market, it remains vigilant in assessing market conditions and prioritizing flexibility in its funding approach.
The bank’s focus on sustainability and diversified capital sources aligns with its broader mission of supporting the Philippine economy while meeting global standards for environmental, social, and governance (ESG) practices.
In an industry marked by evolving investor expectations and a strong emphasis on sustainable finance, RCBC’s expanded MTN program signals the bank’s readiness to leverage favorable market opportunities while addressing both its strategic funding needs and the growing demand for green financial instruments.
As it moves forward, RCBC is expected to remain a key player in the Philippine financial sector’s sustainable finance efforts, positioning itself as a reliable choice for investors seeking both financial returns and positive environmental impact.
For more information about RCBC’s sustainability efforts, check out this link.