BDO completes P5-B deposit paper offering

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

In a disclosure to the Philippine Stock Exchange on Thursday, BDO said it 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.

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

The LTNCD issuance is meant to lengthen the maturity profile of 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 Philippine Deposit Insurance Corp. up to a maximum of P500,000 per depositor; and

— Negotiability subject to market conditions.

Hongkong and Shanghai Banking Corp. and Deutsche Bank acted as the joint lead arrangers and selling agents for the issue while BDO, BDO Private Bank and Multinational Investment Bancorp. were the other selling agents.—Doris C. Dumlao