Global debt watcher Fitch Ratings gave a BB rating, or non-investment grade speculative, to the proposed $400-million worth of senior notes issuance of Rizal Commercial Banking Corp.
RCBC will issue the notes under the bank’s $1-billion medium-term note program.
“Fitch Ratings has assigned Philippines-based Rizal Commercial Banking Corp.’s proposed US dollar-denominated senior notes an expected ‘BB(EXP)’ rating… The final rating is contingent on the receipt of final documents conforming to information already received,” Fitch said in a report Monday.
“The senior notes are rated at the same level as RCBC’s ‘BB’ long-term issuer default rating. This is because the notes constitute direct, unsubordinated and unsecured obligations of the bank, and rank equally with all its other unsecured and unsubordinated obligations,” Fitch said.
Fitch said the rating was sensitive to changes in RCBC’s issuer default rating, which is driven by its viability rating of ‘bb.’
RCBC president and chief executive Lorenzo Tan in September said the bank would issue the $400-million senior notes before the year ends to finance its medium and long-term asset growth and “other general corporate purposes.”
“We might raise this before the end of the year, subject to market conditions,” Tan said in a text message.
RCBC is one of the biggest lenders in the country. The bank in the first half of the year posted a consolidated net income of P2.53 billion, 25 percent higher than P2.02 billion a year ago on the back of the strength of its core businesses.
The profit translated into an annualized return on equity and return on assets of 9.3 percent and 1.1 percent, respectively.
Net interest income reached P7.45 billion and represented 63 percent of gross income, which increased 12.4 percent to P11.8 billion. The bank achieved an annualized net interest margin of 4.2 percent, which remains one of the highest in the sector.
Tan said the bank was on track and advancing on all fronts, especially from core lending to deposits to fee-based income.
Core lending business was also sustained with loan book excluding interbank loans expanding by 18 percent to P275.7 billion. All market segments sustained their growth with average loan volumes of corporate, consumer, and SME increasing by 20 percent, 18 percent, and 30 percent, respectively.
Loans for small and medium enterprises comprised 12 percent of the bank’s total loan portfolio as planned. Meanwhile, micro-finance lending through Rizal Microbank continued its consistent climb with outstanding loan portfolio increasing by 46 percent. The interest income from the lending business contributed 83 percent of the total interest income of the bank.
Total deposits stood at P321.9 billion with low-cost CASA (current and savings account) deposit level growing P16.6 billion to P204.3 billion, resulting in a CASA ratio of 63 percent.
Total consolidated assets grew rose 9 percent to P468.7 billion, while capital funds improved P16.9 billion to P62.4 billion.