BDO Unibank Inc., the country’s largest lender controlled by the Sy family, opened on Tuesday the offering for P5 billion worth of long-term negotiable certificates of deposit as part of its efforts to diversify the maturity profile of its funding sources and support business expansion.
This follows the bank’s issuance of P7.32 billion worth of LTNCDs in April this year.
BDO said in a disclosure to the stock exchange the latest tranche of LTNCDs would have a term of five and a half years with an indicative rate in the area of 3.75 percent.
The final coupon rate will be set at the end of the offer period. Interest will be paid quarterly, calculated on a 30/360 day count basis.
The minimum investment is P100,000 with increments of P50,000. The offer period will be from Sept. 10 to Sept. 20 while the issuance was set on Sept. 27, 2019.
“The bank, however, reserves the right to shorten the offer period, and has the option to increase the issue size, depending on market demand,” it said.
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.
LTNCDs are an attractive investment especially for individuals, as interest income is exempt from withholding taxes if the LTNCDs are held for at least five years, based on current regulations.
LTNCDs are covered by deposit insurance with the Philippine Deposit Insurance Corp., subject to PDIC’s applicable rules and regulations, including maximum insurance coverage per depositor up to P500,000.
ING Bank N.V., Manila branch is the sole arranger and selling agent for the issue while BDO and BDO Private Bank are the other selling agents.
BDO has the country’s largest distribution network, with more than 1,300 operating branches and over 4,000 ATMs nationwide.