China Bank plans P50B fund-raising

Sy family-led China Banking Corp. is planning a P50-billion fund-raising program by offering a mix of high-yielding deposit notes, bonds or commercial papers.

“This program will be used to fund the bank’s strategic initiatives and expansion, specifically in relation to the expected growth in the lending business,” China Bank disclosed to the Philippine Stock Exchange on Thursday.

“This is in line with bank’s intention to be an active participant in the ongoing expansion of the country and the government’s infrastructure initiatives.”

Based on the disclosure, the funding program could be a combination of long-term negotiable certificate of time deposit (LTNCDs), retail bonds or commercial papers.

LTNCDs are negotiable certificates of time deposit issued by banks, with a minimum maturity of five years and denominated in Philippine peso. They usually have higher yields compared to regular time deposits or savings accounts. Interest on LTNCTDs is tax-free for individual investors if the instrument is in the name of the individual holder and is held for at least five years. These instruments are insured with the the Philippine Deposit Insurance Corp. subject to applicable rules and regulations on maximum insurance coverage.

Retail bonds are long-term debt papers which must be registered with the Securities and Exchange Commission while commercial papers are short-term unsecured promissory notes or IOUs.