Metrobank’s planned note issuance receive ‘Baa2’ rating from Moody’s

Global debt watcher Moody’s Investors Service on Monday assigned an investment grade of “Baa2” to the long-term senior unsecured component of Metropolitan Bank & Trust Co.’s $2-billion medium-term note program.

Moody’s said in a statement the ratings were in line with the bank’s “Baa2” foreign and local currency deposit ratings and reflect the bank’s “baa2” baseline credit assessment and Moody’s expectation of a very high probability of support from the Philippine government in times of need.

“MBT’s baa2 BCA reflects the bank’s healthy asset quality; stable profitability, underpinned by its robust access to low-cost deposits; high capitalization, with a proven track record of shareholders’ support; and strong funding and liquidity, supported by its leading domestic franchise,” Moody’s said.

It said the asset risk for Metrobank was rising because of the coronavirus outbreak, but Moody’s expects its asset quality to remain robust, underpinned by a loan composition that is weighted toward financially sound corporates.

“Profitability pressures because of slower loan growth and higher credit costs will be somewhat offset by its resilient net interest margin,” it said.

“The MTN program allows MBT to issue senior notes in line with the maturities, currencies, interest rates and redemption structures specified in the applicable pricing supplement. The senior notes to be issued under the program will constitute MBT’s direct, unconditional, unsubordinated and unsecured obligations and will rank pari passu among themselves and equally with all of Metrobank’s other unsecured and unsubordinated obligations,” it said.

It said Metrobank’s medium-term note program ratings of “Baa2” were at the same level as the sovereign rating of the Philippines. It said it was very unlikely for the bank to be rated above the sovereign, as Moody’s views the correlation of risk between the bank and the sovereign to be high.

“MBT’s ratings could be upgraded if Moody’s upgrades Philippines’ sovereign rating,” it said.

Metrobank is the country’s second-largest bank in terms of assets. It reported total assets of P2.4 trillion as of end-March.