BDO, Union Bank offer deposit certificates
Banco de Oro Unibank and Union Bank of the Philippines are embarking on fresh fundraising activities through the offering of high-yielding deposit certificates.
BDO and Union Bank will offer long-term negotiable certificates of deposits (LTNCDs) to raise P5 billion each, according to separate disclosures to the Philippine Stock Exchange.
BDO is offering P5 billion worth of seven-year LTNCDs at an indicative interest rate range of 3 to 3.25 percent a year until Aug. 27. It has tapped ING Bank and Standard Chartered Bank as joint lead arrangers and selling agents.
Union Bank disclosed that the Bangko Sentral ng Pilipinas had approved its planned issuance of as much as P5 billion in LTNCDs with a tenor of at least five years and three months to as long as seven years.
Union Bank, which mandated HSBC as arranger and underwriter, has one year to launch this offering. Selling agents are Union Bank, HSBC and Multinational Investment Bancorporation (MIB).
In its disclosure, the bank said proceeds would be used to “improve the bank’s deposit maturity profile and support business expansion plans.”
While LTNCDs cannot be pre-terminated unlike regular time deposits, they are negotiable and can be sold in the secondary market.
By issuing LTNCDs, which are tax-free because of the long tenor, banks can offer better yields to clients. LTNCDs are covered by insurance provided by Philippine Deposit Insurance Corp. but only up to P500,000 per depositor.
In the case of BDO, the LTNCDs are offered in minimum denominations of P100,000 and additional denominations of P50,000 each.
