PNB completes P5-B offer of long-term deposits

Philippine National Bank completed a P5-billion offering of long-term deposits on the same day it launched the product—one of the fastest fund-raising seen in the local capital market to date.

The banking arm of taipan Lucio Tan on Friday announced that it had successfully raised the amount last Thursday through a public offering of long-term negotiable certificates of time deposits (LTNCDs) at a record-low interest rate.

PNB reported that, with an oversubscribed book early in its offering, the 5.5-year LTNCD issuance was priced at 3 percent per annum, the lowest ever coupon for such an instrument. The public offer period was supposed to run for three days, from July 25 to 29, but it was closed the same morning as the launch due to strong demand, the bank said in a press statement.

“We are overwhelmed by the confidence and support of our investors in PNB. This fundraising exercise will allow us to support our asset growth, and make us even more competitive in the banking industry,” PNB president Omar Mier said.

HSBC acted as sole lead arranger and bookrunner for PNB’s offering of LTNCDs, which are negotiable certificates of time deposit with a designated maturity or tenor representing a bank’s obligation to pay the face value upon maturity, as well as make periodic coupon or interest payments during the life of the deposit.

These deposits are covered by the Philippine Deposit Insurance Corp., which insures up to P500,000 per depositor. Interest is paid quarterly, and is tax-exempt for qualified individuals if held for at least five years. The minimum denomination of the LTNCD is P500,000 with additional investments of P100,000 thereafter.

“Raising P5 billion just a few hours into its first offering day, and pricing the LTNCD at the lower end of pricing guidance, is a testament to PNB’s franchise,” said Wick Veloso, HSBC Philippines president.

LTNCDs PNB merged with Allied Banking Corp. earlier this year, making PNB the fourth largest privately owned bank in the Philippines in terms of total assets.