BDO offers high-yield deposit certificates
Banco de Oro Unibank on Monday launched an offering of a new batch of high-yielding deposits worth up to P5 billion as part of efforts to stretch out the maturity profile of its funding sources and support its medium-term growth objectives.
The new offering of long-term negotiable certificates of deposits (LTNCDs) will carry a maturity of five and a half years and will likely be priced at about 4 percent a year, BDO told the Philippine Stock Exchange. Banks currently pay about 2-3 percent a year on regular time deposits.
The pricing will be finalized at the end of the offer period, which began yesterday and will run until March 15. BDO, however, reserves the right to adjust the timing of the offer as needed. Issue date is targeted on March 25.
While the LTNCDs cannot be preterminated unlike regular time deposits, they are negotiable so they can be sold in the secondary market to other investors. By using the LTNCD structure, which is tax-free because of the long tenor, banks can offer better yields to clients.
LTNCDs are covered by deposit insurance with the state-owned Philippine Deposit Insurance Corp. up to a maximum amount of P500,000 per depositor.
For the BDO LTNCD offering, interest will be paid quarterly and will be tax exempt for individual investors if held for more than five years. The minimum investment is P100,000 with increments of P50,000 thereafter.
BDO has mandated foreign banks Standard Chartered Bank and ING Bank N.V. as the joint lead arrangers and selling agents for the LTNCD, while BDO and BDO Private Bank are the other selling agents.
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