HSBC Capabilities in the Philippines

HSBC, the second oldest bank in the Philippines, opened its first branch in Binondo in 1875.

Corporate Banking:

The alignment of the corporate, commercial, investment banking and treasury businesses has allowed the Bank's dedicated relationship management team to gain a deeper understanding of customers' every requirement to offer tailor-made, value-added solutions. Strong capital markets presence and experience, with HSBC¶s impressive abilities in project structuring, origination, syndication, underwriting and transaction management. Unrivalled access to the worldwide equity markets as well as a full range of advisory services to public sector bodies and listed and private companies. HSBC is a major market maker in the Peso and Foreign Currency fixed income and money markets. A wide variety of foreign exchange services including spot, swaps, forward contracts, derivatives and other structured products are also offered.

The HSBC Group in the Philippines consists of 8 Main Bank Branches, 16 Savings Bank Branches and 3 HSBC Group Service Centers, together employing over 8,000 people.

Debt Capital Markets:

Equity Capital Markets:

HSBC has 22 Corporate Banking Relationship Managers in the Philippines.

Global Markets:


HSBC Insurance Brokers (Philippines) Inc. specialises in business continuity solutions, wealth management and employee benefits.

HSBC Capabilities in the Philippines

Investment Banking:

Drawing on the expertise of industry teams from the region, HSBC offers specialist advice on mergers and acquisitions, privatisations, equity capital raising and structured finance.

Payments and Cash Management:

A leading provider offering the full range of domestic, regional and global solutions that include collections (Integrated Receivables Solutions), disbursements (Integrated Payments Solutions) and liquidity management (Liquidity Management Solutions), Electronic Filing and Payment System for Philippine government Tax Payments, accessible through HSBC¶s delivery channels, HSBCnet, HSBC Connect, and B2G (Business to Government) E-Tax, with the ability to integrate with companies¶ ERP platforms. Strong expertise in project finance is provided.

Project and Export Finance: Securities Services:

HSBC provides comprehensive global, regional and domestic fund services including fund administration, global custody, corporate trust and loan agency, and sub-custody settlement and services to the international asset management industry. We are the leading choice of global custodians, broker dealers and fund managers, and therefore capture the largest share and trade settlement volume in the country. A wide range of import and export services and trade finance facilities. It is also a pioneer in electronic banking solutions in the Philippines for exporters and importers.

Trade Services & Supply Chain:

The Investment and Infrastructure Challenge
Breaking the vicious circle

The quality of infrastructure and the attractiveness of the tourism investment proposition are linked

Infrastructure remains outdated

The Government is therefore adopting a twin ± track approach, inviting investment in both tourism and infrastructure using recognised models to attract direct investment

Available funds are limited

Poor condition of infrastructure discourages private investment

The Philippines is far from alone in facing similar challenges Private and public income remains low or will be reduced

Poor infrastructure restricts general investment

Economic growth is hindered

Private sector activity is constrained

The PPP Approach: Roles

PPP models have been established and are working in many places around the world

Government: 1. Sets legal and regulatory framework; 2. Identifies, scopes and develops projects; and 3. Underpins unmanageable risks.

The international banking community and the pool of available development finance is familiar with the model

Private Sector: 1. Verifies project framework, bids; 2. Undertakes design, build, operation; and 3. Provides funding (debt and equity).

Favourable Local Funding Environment
yPHILIPPINE RESERVE MONEY Funding Considerations:  Historically low yields for fixedrate borrowers  Very strong momentum and demand for long-term Philippine corporate paper  nshore USD and PHP liquidity in the Philippines is high  Particularly strong demand from onshore and offshore retail and High Net Worth Individuals 

1,2 0 0

1,0 0 0

Source: 3 November, Bangko Sentral ng Pilipinas





0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2 0 10 YT

¥ §




Jan 9

pr 9

Jul 9

Oct 9





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¥ ¦ ¨

¥ ¦ ¨ ©

¥ ¦ ¨



¦¨ ©


¤¦ ¨

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Positive outlook and sentiment and Philippine Macroeconomic factors and Philippine government


Source: 3 November, Bloomberg

4 Jan


¥¥ ¥ ¦ ¢ ¡

Sources of debt finance - local

Mixed economy of domestic banks

Capital Markets Private Placement and Domestic Banks PHP5-15 billion (US 100 ± 300m) Up to 5-7 years, with limited demand for 10 years PHP (or US$) Fixed or floating

Capital Markets Public Bonds

Bank and capital markets products (note: overlap between private placemen/domestic banks)

Liquidity (per transaction)

PHP10-15 billion (US 200 ± 300m) Up to 5-7 years, with limited demand for 10 years PHP Fixed

Tenor tends to be relatively limited

Deals tend to be bilateral and club



7- weeks

13-1 weeks

Requirements / Constraints

Single-Borrower Limit (SBL) on lenders Liquidity / Terms / FX hedge

Requires SEC Registration Need AAA domestic rating Size / tenor


Sources of debt finance ± commercial international

International banks are present and can off-shore structures to allow larger deal volumes

International Banks (commercial) US$100m (onshore) ~US$200-500m (offshore) Corporate Level : Up to 5 years Project Finance : 10-12 years US$ (limited PHP / swapped) Floating or Swapped Corporate level : 10-12 weeks Project finance : 3-6 months Limited local booking / PHP Funding No SBL constraints offshore

Capital Markets USD Bonds

Syndicated or club approach

Liquidity (per transaction)

US$200 to 500 million for US$ Reg S Bonds

US$ borrowing requires US$ revenue flows; limited capability for swaps

Tenor Currency Rates

Up to 5-7 years, with limited appetite for 10 years USD Fixed


10-12 weeks

Requirements / Constraints Advantages

FX risk, higher costs

No SBL constraints

Sources of debt finance ± DFIs and bilaterals

Eligibility criteria need to be met

Multi-Lateral Agencies Up to US$250m each (or 25% of project size) 10-15+ years

Bilateral Development Agencies US$30-70m each

Export Credit Agencies

Development or capital account driven

Liquidity (per transaction)

Potentially > US$500m ECD guidelines, up to 1 .5 years US$, some can do PHP Fixed or floating (or swapped) 12 - 16 weeks

Generally co-lending approach

Can significantly increase deal volumes

10-15 years

Currency Rates

US$, can swap in PHP Floating or swapped Floating or swapped


6- months

6- months

Requirements / Constraints Advantages

Development aspect pen tendering process

Development aspect

Eligible content Upfront premium

Tenor, Withholding tax exemption Concessionary programs

Awards & Accolades ± Corporate Banking Philippines
Best Sub-Custodian (20062010)
The Asset Triple A Transaction Banking Awards

Best Domestic Custodian (2008-2010) Philippines
The Asset Triple A Transaction Banking Awards

Best Sub-Custodian Philippines
Global Finance: Best Sub-Custodian Banks 2004-2007 and 2009-2010

Source The Asset Triple A House

Source The Asset Triple A House

Source Global Finance

Magat Hydro Power Privatization Philippines
Best Project Finance / Best Privatization HSBC acted as Mandated Lead Arranger, ffshore Triple The Asset CollateralATrustee, Accounts House Trustee

Top Rated (1996-2009) #1 in Leading Clients Category (2007-2009)
Global Custodian Emerging Markets Survey

The Banker Awards Deals of the Year 2007
Country Winner - Philippines Ayala Corporation's Ps5.8bn perpetual preferred shares HSBC acted as Joint Issue Manager/ Joint Lead Underwriter/ Joint Bookrunner


HSBC acted as Mandated Lead Arranger, ffshore Collateral Trustee, Accounts Project Finance International Trustee

#1 Greenwich Overall Quality Index
Greenwich Large Corporate Treasury Management Research 2007

Source Greenwich Associates  


Source Global Custodian

Source The Banker May 2008

Magat Hydro Power Privatization Philippines
Asia Pacific Power Deal of the Year

Best Sub-Custodian
Global Investor Survey Weighted Category, 2008 and 2009 Unweighted Category, 2009

Philippine Dealing System Holdings Corporation
Top custody house for 2008-2009

Source Global Investor Magazine #1 Greenwich Relationship Quality Index
Greenwich Large Corporate Treasury Management Research 2009

Source PDS Group #1 Greenwich Sales Quality Index
Greenwich Large Corporate Treasury Management Research 2009

Source Greenwich Associates

Source Greenwich Associates

Awards & Accolades ± Global Markets Philippines

Greenwich FX Survey 2008 #1 Market Penetration in Fixed Income (Insurance Companies) #1 Market Penetration in Interest Rate Derivatives (users $100-500mio) Greenwich FX Survey 2007 #1 Market Penetration in FX Services #1 Market Penetration in Interest Rate Derivatives #1 Market Share in Interest Rate Derivatives

AsiaMoney FX Survey 2008 Best for Overall FX Services Best for Innovative FX Products and Structured Ideas Best Single Electronic Trading Platform AsiaMoney FX Survey 2007 Best Overall FX Service Best For Innovative FX Product and Structured Ideas Best FX Prime Brokering Services For Asian Clients

³In particular, the bank was able to deliver all-in financing packages for cross-border borrowers with bundled swaps, sometimes at levels inside international funding costs. HSBC led 86 cross-border deals in local currencies worth $3.1 billion, which was more than three times the number and almost twice the value of its closest rivals.

Best Local Currency Bond House

It ranked first in the Asian domestic currency league tables, top in the individual markets of Hong Kong, Indonesia, Malaysia, Philippines and Singapore, and out-ranked its nearest competitor in six of the region¶s major markets. HSBC¶s diverse spread of business and its wide geographical penetration defies any criticism that it relies too heavily on its natural Hong Kong home-base. In fact, it led local currency deals for issuers from 21 different nations, with a range of structures«´

FinanceAsia, December 2008
³Its emerging markets credentials were fully on display as it was engaged in the most significant theme of regional DCM in the year: the emergence of domestic debt. At a time when the US investment banks were finding it tough to survive, let alone compete, HSBC benefited from a flight to quality ± in terms of counterparty risk appetite ± and an increase in business due to its stable and very local business model.

Domestic Bond House of the Year

Deals in Malaysian ringgit from State Bank of India and in Thai baht from Kexim pay testament to the strength of its swap desks in those countries. It is the lubricant in the machine that enabled HSBC to offer a full range of funding options throughout Asia. In 2008, that combination proved vital as the US dollar bond market suffered from severe dislocation.´ IFR Asia, December 2008

Awards & Accolades ± Global Markets Philippines

Interest Rates
G3 Denominated Products 

Currency Interest Rates
Local Currency Products 

Local Currency Products 

verall Provider Product Range

Overall Provider 


Product Range Best Ideas and Most Innovative Products Best Structuring Capabilities Best Pricing and Execution Capabilities Best Training and Educational Support Best After-Sales Service



Best Structuring Capabilities Best Pricing and Execution Capabilities 

Best Ideas and Most Innovative Products Best Structuring Capabilities Best Pricing and Execution Capabilities Best Research and Market Coverage Best Training and Educational Support Best After-Sales Service

After-Sales Service 


Selected PEF Credentials

Magat Hydropower
Asia Power Deal of the Year 2007 ± PFI Magazine

y Award-winning financing for the privatisation of 360 MW hydro power project y US$ and PHP multisource financing (including the IFC) y Project exposed to electricity market risk


Masinloc Power Partners

US$380 million MLA, Offshore Security Trustee

y HSBC only international commercial bank in the financing

US$1.1 billion Account Bank, Onshore and Offshore Security Trustee, Facility Agent

y HSBC acted as account bank, onshore and offshore security agent and facility agent for US$1.1 bio. financing of Masinloc Power Partners acquisition of 600 MW Masinloc power plant y Multi-source financing with IFC, ADB, domestic and international banks


Quezon Power

y HSBC acted as sole solicitation agent and rating advisor to Quezon Power in relation to their outstanding US$175 mio. bond y Excellent response to well structured and priced request

US$175 million Consent solicitation to enable recapitalisation Sole Solicitation Agent and Ratings Advisor


Mirant Acquisition

y HSBC supported the bid by International Power and Mitsui for the acquisition of Mirant Philippines asset y Large US$2+ billion debt commitment y Multi-source financing with JBIC


Mirant AP Ltd

y HSBC arranged the refinancing of Mirant Philippines debt for Sual and Pagbilao power plants y Successful financing upscaled due to strong demand by the market

1999 ± 2001

Malampaya Farm-In Agreement

y HSBC advised Shell on farm-in agreement with Texaco for the Malampaya gas field y Consideration: US$ 1 billion

c. US$2 billion MLA in support of bid for acquisition

US$700 million MLA

c. US$1 billion Agreement with Texaco equiv. to 45% of Malampaya Field Financial Advisor

HSBC ± Leading Bondhouse in the Philippines
yNo. 1 for Philippines All Bonds
op Boo r nners of Philippines ll Bonds 2010YTD Rank Name US$ m Issues 1 2 3 4 5 6 7 8 9 10 HSBC UBS Deutsche Bank Citi Barclays FMIC Credit Agricole JP Morgan DBP Credit Suisse
C      D B A

yNo. 2 for PHP Bonds
o Boo r nn rs of PHP Bonds 2010 YTD n N
% $  

yNo.1 for Philippines USD Bonds
o Boo r nn rs of P 2010YTD n N 2 3 4 5 6 7 8 9 10
% $ " !  ! &

n s



2 1 1 1 1 1 1 1

ySource: Bloomberg, 3 November 2010

yHSBC has led successful transactions for the Sovereign, Quasi-sovereign, Financial Institutions and Corporate issuers in Philippines

ySM Investments Corporation

yRepublic of the Philippines yUSD3.2 billion Global Bond Exchange Offer for New Global Bonds due 2021 and Re-Opening of 2034 yJoint Dealer Manager and Bookrunner yOct 2010

yRepublic of the Philippines yPHP44.109 billion Global Peso yBonds Due 2021 yJoint Lead Manager and Bookrunner ySept 2010

yBest Debt House for the Philippines
y2008 and 2009

yBest Debt House for the Philippines

yUSD400 million Fixed Rate Bonds due 2017 and Exchange Offer for existing 2013s and 2014s yJoint Dealer Manager, Lead Manager yand Bookrunner yOct 2010

yThe Asset 


y HSBC was recently awarded ³Best Debt House in the Philippines 200 ´ by the Euromoney Awards for Excellence and ³Best Debt House in the Philippines 200 ´ by The Asset Asian Awards, a repeat success which we were also awarded in 2008. These awards recognize HSBC¶s unmatched execution and distribution capabilities in both the Philippine capital markets and global markets. 

yRizal Commercial Banking Corporation yPHP4.339 billion Long-Term Negotiable yCertificates of Time Deposit due 2015 ySole Lead Arranger and Bookrunner yMay 2010

yAyala Corporation yPHP10.0 billion Fixed Rate Putable Bonds due 2017 and putable 2015 yJoint Lead Underwriter yApril 2010

yPower Sector Assets & yLiabilities Management Corporation yPHP30.0 billion Fixed Rate yRetail Bonds due 2015 and 2017 yJoint Issue Manager and Bookrunner yApril 2010




( & 0) '

1,436 1,167 879 779 500 417 300 292 223 167

13 7 5 7 2 7 1 2 2 1

20.8 16.9 12.8 11.3 7.3 6.1 4.4 4.2 3.2 2.4

1 2 3 4 5 6 7 8 9 10

First Metro H B Development Bank Allied Banking Corp PNB Capital & Investment BDO Capital & Investment BPI Capital Corporation Citi ING Groep NV RCBC Capital

18,917 2 10,000 1,667 1,667 1,250 1,250 1,250 1,250 1,250


32.6 2 . 17.2 2.9 2.9 2.2 2.2 2.2 2.2 2.2

H B Deutsche Bank UBS Citi Barclays JP Morgan Standard Chartered Bank of America Standard Bank Morgan Stanley

713 667 585 500 125 125 80 80 50

4 6 5 2 1 1 1 1 1

2 .2 18.7 17.5 15.4 13.1 3.3 3.3 2.1 2.1 1.3

yInternational Container Terminal ySM Prime Holdings, Inc. yPHP1.0 billion Inverse Floating Rate yNotes due 2015 ySole Lead Manager and Bookrunner yJune 2010 yServices, Inc. yUSD200.0 million Re-opening of ySenior Notes due 2020 yJoint Lead Arranger and Bookrunner yMay 2010

yInternational Container Terminal yServices, Inc. yUSD250.0 million Senior Notes ydue 2020 yJoint Lead Arranger and Bookrunner yMarch 2010

yRepublic of the Philippines yUSD1.5 billion Re-opening yof Global Bonds due 2020 and 2034 yJoint Lead Manager and Bookrunner yJanuary 2010




" !






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7 6 $ 

4 4 5 43  

Bonds s %



This document is issued in the United Kingdom by HSBC Bank plc (³HSBC´). HSBC is authorised and regulated by the Financial Services Authority (³FSA´) and is a member of the HSBC Group of companies (³HSBC Group´). Any member of the HSBC Group, together with their directors, officers and employees may have traded for their own account as principal, underwritten an issue within the last 36 months, or have a long or short position in any related instrument mentioned in this material. HSBC may be solicited in the course of its placement efforts for a new issue by investment clients for whom it already provides other services. HSBC may allocate securities to its own proprietary book or to an associate of HSBC Group. This represents a potential conflict of interest. HSBC has internal arrangements designed to ensure that it will give unbiased and full advice to a corporate finance client about valuation and pricing of the Issue and internal systems, controls and procedures to identify and to manage potential conflicts of interest. This document is for information and convenient reference, and is not intended as an offer or solicitation of the purchase or sale of any security or other investment. Except in the case of fraudulent misrepresentation, HSBC does not make any representation or warranty (express or implied) of any nature or accept any responsibility or liability of any kind for accuracy or sufficiency of any information, statement, assumption or projection in this document, or for any loss or damage (whether direct, indirect, consequential or other) arising out of reliance upon this document. Information in this document has not been independently verified by HSBC. Any reference in this document to particular proposed terms of issue is intended as a summary and not a complete description. Terms or characteristics may change before closing. You are solely responsible for making your own independent appraisal of and investigations into the products, investments and transactions referred to in this document and you should not rely on any information in this document as constituting investment advice. Neither HSBC nor any of its affiliates are responsible for providing you with legal, tax or other specialist advice and you should make your own arrangements in respect of this accordingly. Any projection, forecast, estimate or other µforward-looking¶ statement in this document only illustrates hypothetical performance under specified assumptions of events or conditions, which may include (but are not limited to) prepayment expectations, interest rates, collateral and volatility. Such projections, forecasts, estimates or other µforward-looking¶ statements are not reliable indicators of future performance. As with any mathematical model that calculates results from inputs, results may vary significantly according to the values input. You should understand the assumptions and evaluate whether they are appropriate for their purposes. Some relevant events or conditions may not have been considered in such assumptions. Actual events or conditions may differ materially from assumptions. Past performance is not a reliable indicator of future performance. This document is intended for persons who are professional clients or eligible counterparties (as defined in the rules of the FSA) only and is not intended for distribution to, or use by, retail clients. This document also is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. In particular, this document and the information contained herein do not constitute an offer of securities for sale in the United States and are not for publication or distribution to persons in the United States (within the meaning of Regulation S under the Unites States Securities Act of 1933, as amended. Information in this document is confidential. Distribution of this document, or information in this document, to any person other than an original recipient (or to such recipient¶s advisors) is prohibited. Reproduction of this document, in whole or in part, or disclosure of any of its contents, without prior consent of HSBC or an associate, is prohibited. This document should be read in its entirety. This document remains the property of HSBC and on request this document, and all other materials provided by the HSBC Group relating to proposals contained herein, must be returned and any copies destroyed. The foregoing does not exclude or restrict any obligation that HSBC may have under the FSA Rules, or any liability that it may incur under the FSA Rules or the Financial Services and Markets Act 2000 (or any amendment thereof) for breach of any such obligation. FSA It is not intended that this document invites, or induces, you to buy, sell, subscribe for or underwrite any financial instruments or assets in any jurisdiction. Where this would otherwise constitute a ³financial promotion´, it has been provided to you on the basis that it is either an ³excluded communication´ or a ³non-retail communication´.

HSBC Bank plc Authorised and regulated by the Financial Services Authority Registered in England No. 14259 Registered Office: 8 Canada Square, London, E14 5HQ, United Kingdom Member HSBC Group DISCORIGPIT011107

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