They apparently needed more time to book orders. Tier 2 notes are subordinated debt, which will improve a bank’s capital without diluting shareholders’ equity.

DBP issued P10 billion notes last December. This was the first time that a GFI issued such instruments.

Deutsche Bank, First Metro Investment Corporation and HSBC arranged it. The selling agents were Land Bank of the Philippines and Multinational Investment Corporation.

The lead managers booked over P5 billion notes from retail investors. However, corporate investors wanted more time for booking orders. The notes have a maturity of 10 years and are tax exempt.

At the moment DBP capital adequacy ratio is 21 percent, higher than regulators’ minimum requirement of 10 percent.

The bank expects to pay a coupon of 9.5 percent for the bond with a tenure of 10 years, the proceeds of which will be used to strengthen DBP’s capital base.

DBP officials said the proceeds from the notes issue will increase the bank’s capital adequacy ratio to about 36 percent to 38 percent from 21 percent.

DBP originally targeted to raise a total P10 billion in December following a domestic roadshow, but the bond sale had to be postponed as the bank faced difficulty building orders for the paper.

"We have six months to raise the entire amount," said the banker. "But we’re hoping that institutional investors will come as early as next week as the institutions complete their board meetings," he said. This will be the first capital notes issue of a government financial institution in the Philippines.

Settlement for the first P5 billion tranche is set for next week.