BDO completes sale of P5B deposit certificates

MANILA, Philippines—Banco de Oro Unibank has completed a P5-billion fund-raising from the issuance of long-term deposit certificates on the back of strong demand from yield-seeking investors.

BDO announced late Friday that it had closed the offering of long-term negotiable certificates of deposit (LTNCDs) a day ahead of the original schedule “due to oversubscription from retail and institutional investors.”

The LTNCDs will mature in seven years after the issue date and carry a coupon rate of 5.25 percent a year. Interest will be paid quarterly and will be tax-exempt for individual investors if held for more than five years. The settlement date is on October 15.

“The LTNCDs will support the bank’s medium-term growth objectives and help lengthen the maturity profile of its deposit base,” BDO said in a statement.

The securities are covered by deposit insurance with the PDIC up to a maximum amount of P500,000 per depositor.

While the LTNCDs cannot be preterminated, these are negotiable and 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.

Deutsche Bank’s Manila branch and HSBC Ltd. acted as joint lead arrangers and selling agents for the LTNCD, while BDO and BDO Private Bank were the other selling agents.

BDO, the largest bank in the country, is controlled by the family of tycoon Henry Sy.