THE STATE-OWNED Land Bank of the Philippines will offer high-yielding deposit instruments for overseas Filipino workers to help them cope with the shrinking peso equivalent of their offshore earnings.

In an interview, Landbank president Gilda Pico said that as part of the government's strategy to ease the adverse impact of the sharp peso appreciation on OFWs, the bank would offer a new instrument in the form of peso-denominated, long-term negotiable certificates of deposits (LTNCD).

Landbank earlier obtained the government's mandate to spearhead the offering of investment instruments for OFWs, including the OFW bonds. Development Bank of the Philippines and British bank HSBC will also take part in the initiative to help OFWs.

"The initiatives will be launched by (President Gloria Macapagal-Arroyo) in Dubai at the end of this month," Pico said.

She said the new instrument would be offered onshore, but marketing would be conducted here and abroad.

By using the LTNCD structure, Pico said Landbank could offer better yields to OFWs. Since these instruments would carry a term of more than five years, she said investors could likewise enjoy tax exemption.

Asked how much LTNCDs Landbank would like to offer, Pico said it would all depend on market demand.

Unlike regular time deposits, LTNCDs have lower reserve requirements, thus enabling issuing banks to offer higher yields. Another major difference is that investors are required to hold the security until maturity, unlike time deposits where pretermination is allowed.

Landbank is also in-charge of the government's plan to offer multicurrency retail treasury bonds, exclusively for overseas Filipino workers and their families.

The Bangko Sentral ng Pilipinas (the Philippine central bank), which has long advocated the OFW bond offering, believes the government can raise $500 million to $1 billion a year in support of its infrastructure financing while boosting the investments yields of the OFW sector.