BDO raises P5B through high-yield deposit offer

MANILA, Philippines—The country’s leading lender Banco de Oro has completed a fresh P5 billion fund-raising through an offering of high-yielding deposits.

In a disclosure to the Philippine Stock Exchange on Thursday, BDO said it had ended the book-building for long-term negotiable certificates of deposits (LTNCDs) ahead of the Nov. 29 closing schedule due to strong demand.

“The issue was well received by both retail and institutional investors, resulting in early over-subscription,” BDO said.

The banking arm of the SM group began its offering of LTNCDs last Nov. 18.

This latest tranche of LTNCDs carries a term of five and one half years with an interest rate of 3.125 percent per annum. The issue date is set for December 11 this year, while the maturity date is on June 11, 2019.

The LTNCD issuance is meant to lengthen the maturity profile of the BDO’s funding sources as well as support its medium- term growth objectives.

LTNCDs are time deposits but have longer maturity and carry higher yields. By using the LTNCD structure, which is tax-free because of the long tenor, banks can offer better yields to clients.

Other features of BDO’s offering are as follows:

*  tax exemption on interest income for individual investors if held for at least five years;

*  quarterly interest payments;

*  deposit insurance coverage with the PDIC up to a maximum of P500,000 per depositor, and

*  negotiability subject to market conditions.

Hong Kong and Shanghai Banking Corp. and Deutsche Bank (DB) acted as the joint lead arrangers and selling agents for the issue, while BDO, BDO Private Bank and Multinational Investment Bancorp. are the other selling agents.

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