RCBC to offer P5B in deposit notes

Yuchengco-led Rizal Commercial Banking Corp. is raising up to P5 billion within this month through a fresh offering of high-yielding long-term deposits.

In a disclosure to the Philippine Stock Exchange on Friday, RCBC said the long-term negotiable certificates of deposit (LTNCD) would carry a tenor of five years and six months.

“It’s part of RCBC’s liquidity management efforts to match term assets with term liabilities,” RCBC treasurer Jose Emmanuel Hilado said in an interview.

“It is an opportune time to access long-term funding given the prevailing low interest rate environment and favorable issuance pipeline until yearend,” he said.

The bank has mandated two foreign banks—Deutsche Bank AG and ING Bank NV—to arrange the offering, which is targeted to run from December 12 to 20 this year. The actual issuance is slated for December 27.

The instruments will be offered for a minimum denomination of P50,000.  Part of the issuance will bear a fixed coupon and issued at 100 percent of face value while some will be zero-coupon and issued at a discounted face value.

Hilado said the offering would be priced next week based on five-year local interest rate benchmark PDSTF.

Another incentive for RCBC to offer these instruments, Hilado explained, was the lower reserve requirement imposed on LNTCDs of 3 percent compared to the usual 21 percent on regular deposit liabilities of banks.

For clients, he said the incentive would be the tax exemption if the instruments were held to maturity.

Unlike regular time deposits, investors were required to hold the LTNCDs until maturity. But since these instruments are negotiable, they can be used as collateral or sold to another investor without effecting a change in ownership.

RCBC last offered similar instruments in April 2010, likewise raising P5 billion.