BdO Unibank Inc. is again selling P5 billion in long-term negotiable certificates of deposit (LTNCD) to diversify the maturity profile of its funding sources and support expansion.
The latest tranche carries a term of five and a half years with an indicative rate in the area of 3.75 percent, the lender told the stock exchange.
“The final coupon rate will be set at the end of the offer period. Interest will be paid quarterly, calculated on a 30 by 360-day count basis. The minimum investment is P100,000 with increments of P50,000,” BdO said.
BdO set the offer period from 10 to 20 September, with the issue date slated on 27 September. Also, the lender may adjust the offer period or increase the issue size depending on market demand.
This marks the second time this year that the bank tapped the local debt market after it similarly raised P7.32-billion in LTNCD in April this year. The proceeds from the issuance were likewise allotted to lengthening the maturity of BdO’s funding source and supporting business expansion initiatives.
BdO mandated ING Bank N.V. Manila Branch as sole arranger and selling agent for the offer, while BdO and BdO Private Bank serve as the other selling agents.
LTNCD are deemed an attractive investment for individuals as the interest income is exempt from withholding tax if the LTNCD are kept for at least five years. Maximum insurance coverage for LTNCD is P500,000 per depositor.
They are covered by deposit insurance with the Philippine Deposit Insurance Corp. subject to its rules and regulations.
The Bangko Sentral ng Pilipinas has made it easier for lenders to tap LTNCD by recently cutting down the banks’ deposit reserve requirement at a uniform four percent from the previous seven percent, a move that effectively injected additional liquidity awhile also deepening the capital market.
BdO reported 54 percent higher net income in the first half of the year, to P20.2 billion from P13.1 billion in the same period last year owing to strong recurring income from its core units paired with higher fee income.