BDO Unibank to offer P5B in high-yield deposits

MANILA, Philippines—The country’s largest bank, Banco de Oro Unibank, plans to offer as much as P5 billion in high-yielding deposits to fund growth as well as to lengthen the maturity profile of its deposit base.

In a disclosure to the Philippine Stock Exchange on Tuesday, BDO said the proposed long-term negotiable certificates of deposit (LTNCDs) would have a tenor of seven years.  The need to support growth and diversify funding base was cited especially as BDO’s consumer loans have been growing strongly recently, the bank said.

The offering will run from September 26 to October 5 with the issue date set for October 15 but BDO reserves the right to adjust the timing as needed, according to the disclosure.

Deutsche Bank AG Manila Branch and The Hongkong and Shanghai Banking Corp. Limited were mandated as the joint lead arrangers and selling agents for the LTNCD, while BDO and BDO Private Bank were the other selling agents.

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 coupon or interest payments during the life of the deposit. They are covered by deposit insurance with the PDIC up to a maximum amount of P500,000 per depositor.

While the LTNCDs cannot be pre-terminated unlike regular time deposits, they are negotiable so they can be sold in the secondary market to other investors. By using the LTNCD structure, which is tax-free because of the long tenor, banks can offer better yields to clients.

BDO said the indicative coupon rate will be based on the prevailing seven-year PDST-F benchmark and would be finalized at the end of the offer period. Interest will be paid quarterly and will be tax-exempt for individual investors if held for more than five years.

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

BDO is led by the family of the Philippines’ wealthiest man, Henry Sy, who also has interests in retailing, shopping mall development and real estate.