BDO issuing P5-B in high-yield IOUs

The country’s biggest lender BDO Unibank Inc. plans to raise at least P5 billion from a new offering of high-yield deposits, aiming to diversify the maturity profile of its funding sources and support business expansion plans.

This latest tranche of long-term negotiable certificates of deposits (LTNCDs) will have a term of five and a half years with an indicative rate of 3.75 percent, BDO disclosed to the Philippine Stock Exchange on Tuesday.

The offer period will be from Sept. 10 to 20, with the issue date set on Sept. 27. BDO, however, reserves the right to shorten the offer period and the option to increase the issue size, depending on market demand.

The final coupon rate will be set at the end of the offer period and interest will be paid quarterly.

The minimum investment is P100,000 with increments of P50,000 thereafter.

BDO earlier issued P7.32 billion worth of LTNCDs in April this year.

LTNCDs are negotiable certificates of deposit with a designated maturity and represent a bank’s obligation to pay the face value upon maturity, with periodic interest payments during the life of the deposit.

These are deemed as an attractive investment especially for individuals as the interest income is exempt from withholding taxes if the LTNCDs are held for at least five years.

LTNCDs are covered by deposit insurance with Philippine Deposit Insurance Corp., subject to PDIC’s applicable rules and regulations, including maximum insurance coverage per depositor up to P500,000.

ING Bank is the sole arranger and selling agent for the issue, while BDO and BDO Private Bank are the selling agents. —DORIS DUMLAO-ABADILLA