Bonds you can trust
UPDATE:
Due to the strong demand, this offer has been closed early.
Thank you to all investor clients for your trust and support. To learn more about other available investments, please visit the Fixed Income page.
As part of its approved corporate bond program, Metrobank is issuing at least Php 10 billion, 1.25 year fixed rate bonds.
Issuer: Metropolitan Bank & Trust Co.
Type: Fixed-Rate bonds (the “Bonds”) constituting the direct, unconditional, unsecured and general obligations of the Issuer
Issue Size: Php 10 billion
Tenor: 1.25 years
Maturity Date : September 24, 2021
PDIC Coverage: None
Minimum Investment: P500,000.00, and in integral multiples of P100,000.00 thereafter
Coupon Rate: 3.000% per annum
Interest Frequency/Day count: Quarterly, 30/360
Form: Scripless
Listing: The Bonds are intended to be listed at the Philippine Dealing & Exchange Corp. (PDEx)
Final Withholding Tax: Interest income on the Bonds is subject to a final withholding tax at rates of between twenty percent (20%) and thirty percent (30%) depending on the tax status of the relevant Bondholder under relevant law, regulation or tax treaty.
Transferability of Notes: The Bonds shall be listed and be traded on PDEx. Holders of Bonds may negotiate/transfer ownership to another in the secondary market assuming that there is a willing buyer for the Bonds.
Offer Period: June 3-16, 2020
Settlement Date: June 22, 2020
Issue Date: June 24, 2020
Frequently Asked Questions:
- What is the use of proceeds from the issuance?
The net proceeds of the Bonds will be used by the Issuer to support its lending activities and diversify funding sources.
- What is the yield on these Bonds?
The yield of the bonds is 3.00%. The Bonds will be issued at par.
- How was the coupon determined for these Bonds?
The coupon was based on the interpolated 1.25Y BVAL Reference Rate last June 2, 2020. We then applied a 48.68bps spread to arrive at the coupon of 3.00% based on our market sounding.
BVAL refers to the Peso Reference Rate provided by Bloomberg based on gathered Peso government securities data for benchmark tenors of 1mo to 30yrs. It replaced PDST in Oct 2018 as the benchmark for loans and securities.
- Are there any key differences between the terms and conditions / features in these Bonds versus the Metrobank bonds issued last year?
The Bonds due 2021 have the same terms and conditions as the 4.5% Bonds Due 2023 issued by Metrobank last October 2019 in all respects except for the issue date, coupon payments, tenor, maturity, and prohibited holders definition.
- Why is there a change in the definition of prohibited holders in the terms and conditions?
The Bangko Sentral ng Pilipinas (BSP) released BSP Circular 1062 (Series of 2019) and BSP Memo 001- 2020 which details and clarifies the prohibited holders for a Bank’s bond issuance. In response to these new regulations, the ‘Prohibited Holders’ definition under the terms and conditions of the Issuer’s Bond and Commercial Paper Programme now reads as follows:
Prohibited Holders means persons and entities which are prohibited from purchasing / holding any Bonds and Commercial Papers of the Bank pursuant to the BSP Rules, specifically: (1) the Bank; (2) the Bank’s related parties (except for the Bank’s trust department or its related trust entities) such as: (a) subsidiaries and affiliates of the Bank, and any party (including their subsidiaries, affiliates and special purpose entities) that the Bank exerts direct or indirect control over or that exerts direct or indirect control over the Bank; (b) the Bank’s directors, officers, stockholders, related interests and their close family members, as well as corresponding persons in affiliated companies; and (3) persons and entities that have direct or indirect linkages to the Bank identified as (a) ownership, control or power to vote, of 10% to less than 20% of the outstanding voting stock of the Bank; (b) interlocking directorship or officership, except in cases involving independent directors as defined under existing regulations or directors holding nominal share in the Bank; (c) common stockholders owning at least 10% of the outstanding voting stock of the Bank and 10% to less than 20% of the common outstanding voting stock of the Bank; and (d) permanent proxy or voting trusts in favor of the Bank constituting 10% to less than 20% of the outstanding voting stock of the Bank, or vice versa.
BSP Memo 001-2020 clarified that the prohibition stated in BSP Circular 1062 is meant to prevent certain parties from obtaining undue advantage when transacting in the Bonds. As such, ‘related parties’, to be covered by the prohibition, refer to those who are in possession of have access to material and non-public information affecting the pricing and marketability of the Bonds or that which substantially impacts an investor’s decision to buy or sell the Bonds once the same is disseminated to the public.
A new section in end of the Application to Purchase (“ATP”) titled “Eligibility Questions” has been added to ensure that the prospective investor does not violate the above definition of Prohibited Holders.
- When will investors receive interest payments on the Bonds?
Investors will receive interest payments on a quarterly basis. The Bonds bears interest on its principal amount from and including Issue Date at the final coupon rate to be determined, payable quarterly in arrears, commencing on September 24, 2020 as the first Interest Payment Date, and on December 24, 2020, March 24, 2021, June 24, 2021 and September 24, 2021 following the first Interest Payment Date, or the subsequent Business Day without adjustment to the amount of interest to be paid, if such Interest Payment Date is not a Business Day.
- When and where can an investor purchase the Bonds?
The Bonds will be sold during the public offer period through the selling agents – Metrobank, ING, SCB, and First Metro.
- How long is the offer period of the Bonds?
The Offer Period for the Bonds will be from June 3, 2020 until June 16, 2020. The issue date will be on June 24, 2020. The Selling Agents may require earlier settlement date to ensure orders are duly funded come June 24. The Bank also reserves the right to close the Offer Period at an earlier or later date subject to discussion between the Bank and the Joint Lead Arrangers and Bookrunners.
- How does an investor participate in the public offer period?
Applicants may submit an application to purchase the Bonds during the Offer Period by submitting fully and duly accomplished ATP forms in triplicate together with all the required attachments and the corresponding payments to the Selling Agent from whom such application was obtained. The Issuer reserves the right to adjust the Offer Period as needed.
Given the current limitations of the general community quarantine in place in various parts of the country, electronic submission to the Selling Agents of the ATP form along with the supporting documents is permitted. It is important that the electronic submission of the ATP form contains the legible signature of the investor in the appropriate space. The Selling Agents may require that the original application documents be submitted as soon as practicable given further easing of community quarantine measures.
- Aside from the ATP, what other documents are required to be submitted?
If the Applicant is an individual, the following documents must also be submitted:
a. A clear copy of at least one (1) valid photo-bearing identification document issued by an official authority in accordance with BSP Circular No. 608 (2008) as may be amended from time to time, and documents as may be required by to the Registrar and/or Selling Agent concerned;
b. Two (2) fully executed signature cards in the form attached to the application; and
c. For aliens residing in the Philippines or non-residents engaged in trade or business in the Philippines, consularized proof of tax domicile issued by the relevant tax authority of the Applicant.
If the Applicant is a corporation, partnership, trust, association or institution, the following documents must also be submitted:
a. SEC-certified or Corporate Secretary-certified true copy of the SEC Certificate of Registration, Articles of Incorporation and By-Laws or such other relevant organizational or charter documents;
b. Original or Corporate Secretary-certified true copy of the duly notarized certificate confirming the resolution of the Board of Directors and/or committees or bodies authorizing the purchase of the Bonds and specifying the authorized signatories; and
c. Two (2) fully executed signature cards duly authenticated by the Corporate Secretary, in the form attached to the application.
Corporate applicants who are claiming tax exemption must also submit the following:
a. Certified true copy of a tax exemption certificate, ruling or opinion issued by the Bureau of Internal Revenue no more than one year prior to the date of submission of the same to the Selling Agents or Limited Selling Agents;
b. Original duly notarized undertaking, in the prescribed form, declaring and warranting its tax- exempt status, undertaking to immediately notify the Issuer and the Registrar and Paying Agent of any suspension or revocation of its tax-exempt status and agreeing to indemnify and hold the Issuer and the Registrar and Paying Agent free and harmless against any claims, actions, suits, and liabilities resulting from the non-withholding of the required tax; and
c. Such other documentary requirements as may be required by the Registrar as proof of the Applicant’s tax-exempt status.
- How do I receive my principal and interest?
On the relevant Payment Date, the Registrar shall, upon receipt of the corresponding funds from the Issuer, make available to the Bondholders the amounts due under the Bonds, net of taxes and fees (if any), by way of credits to the bank accounts identified by the Bondholders in the Applications to Purchase.
- Can someone without a TIN invest in the Bonds?
All applicants are required to have a TIN. For joint/multiple applicants in one (1) ATP, at least one (1) of the Eligible Holders subscribing to the Bonds must have a TIN.
- What are the tax implications of investing in the Bonds?
The Tax Code provides that interest-bearing obligations of Philippine residents are Philippine sourced income subject to Philippine income tax. Interest Income received by domestic and resident foreign corporations shall be subject to the final withholding tax of 20.0%. Interest income received by non- resident aliens not engaged in trade or business in the Philippines shall generally be subject to a final withholding tax of 25.0%. Interest income received by non-resident foreign corporations from the Bonds shall be subject to a 30% final withholding tax.
Any gain realized from the sale, exchange or retirement of bonds will, as a rule, form part of the gross income of the sellers, for purposes of computing the relevant taxable income subject to the regular rates of 20-35% effective 1 January 2018 until 31 December 2022 and 15%-35% effective 1 January 2023 for individuals or 30% for domestic and foreign corporations, as the case may be. If the Bonds are sold by a seller who is an individual and who is not a dealer in securities and who has held the bonds for a period of more than 12 months prior to the sale, only 50% of any capital gain will be recognized and included in the sellers’ gross taxable income.
The transfer of Bonds as part of the estate of a deceased individual to his heirs, whether or not such individual was a resident of the Philippines at the time of his death, will be subject to an estate tax, at a uniform rate of 6 percent, regardless of whether the decedent is a resident or non-resident of the Philippines. A holder of such Bonds will be subject to donor's tax, at a uniform rate of 6% based on the value of the total gift in excess of P250,000 made during a calendar year, regardless of the relation of the donor to the donee.
- Will schools and other tax-exempt institutions who are interested to purchase the Bonds whose tax exemption certificate/ruling/opinion issued by the BIR is dated, still be considered as tax-exempt?
A current certified true copy of the original tax exemption certificate, ruling or opinion issued by the BIR dated no more than one year prior to the date of the Application to Purchase can be accepted.
- Can investors currently outside the country invest in the Bonds?
An existing client of Metrobank with an existing designated Treasury Settlement Account can invest, provided he can submit all original or electronic copies of signed required application documents by June 16, 2020.
However, an investor with no Metrobank relationship has to personally open an account in any Philippine branch, and designate such as his Treasury Settlement Account.
