BDO to sell more deposit certificates
Industry giant BDO Unibank Inc. is issuing a fresh set of long-term time deposit certificates this week as it seeks to extend the maturity profile of its funding sources, in line with medium-term growth plans.
In a statement, BDO, the banking arm of retail tycoon Henry Sy, said the offer period for up to P5 billion in long-term negotiable certificates of time deposits (LTNCD) started on Monday and would last until the 29th of the month.
This follows a similar issuance by the bank last September. Other major banks have also been issuing LTNCDs since the start of the year amid the availability of cash in the economy and demand from investors looking to diversify their portfolios.
“The LTNCD issuance is intended to lengthen the maturity profile of the bank’s funding sources as well as support its medium-term growth objectives,” said BDO, the country’s largest bank in terms of assets.
The latest set of LTNCDs would be issued on Dec. 11, or 12 days after the end of the offer period. However, the bank said it may cut the offer period short, if needed. The BSP allows banks to offer LTNCDs at increments of P5 billion.
The new set of LTNCDs will mature in five-and-a-half years, with interest of between 3 and 3.25 percent paid quarterly. The final coupon rate will be announced at the end of the offer period.
Unlike bonds, which companies issue to fund their own operations, LTNCDs serve as a more stable source of funds that banks can lend to their clients.
The money that investors make from LTNCDs are tax exempt, if there are held for at least five years. These are also insured by the state through the Philippine Deposit Insurance Corp. (PDIC).
HSBC and Deutsche Bank (DB) were appointed joint lead arrangers and selling agents for the transaction, while BDO, BDO Private Bank and Multinational Investment Bancorporation (MIB) were named as selling agents.
Other banks that have issued LTNCDs since the start of the year include East West Bank, Rizal Commercial Banking Corp., and the Land Bank of the Philippines.
