BDO to issue P5-B LTNCDs to diversify funding sources, support expansion

August 1, 2017 - 1:16 AM
People walk past a branch of Banco de Oro in file photo from Businessworldonline.

MANILA – Looking to diversify the maturity of its funding sources and support business expansion plans, BDO Unibank, Inc. (BDO) is set to issue P5 billion of Long-Term Negotiable Certificates of Deposit (LTNCD).

BDO has the option to increase the issue size, depending on market feedback, the bank said in a statement. BDO last issued P7.5 billion worth of LTNCDs in April 2015.

This latest tranche of LTNCDs will have a term of five and a half (5.5) years with indicative pricing at 3.50% to 3.75%. The final coupon rate will be set prior to or at the end of the offer period. Interest will be paid quarterly in arrears.

The minimum investment is P100,000 with increments of P50,000. The offer period will start on July 31 up to August 11, with the issue date set for August 18, 2017. However, the Bank reserves the right to adjust the timing of the offer as needed.

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 deemed an attractive investment especially for individuals, as interest income is exempt from withholding taxes if the LTNCDs are held for at least five years. LTNCDs are covered by deposit insurance with the PDIC, subject to PDIC’s applicable rules and regulations, including maximum insurance coverage per depositor.

Deutsche Bank AG, Manila Branch (DB) and ING Bank N. V., Manila Branch (ING) are the Joint Lead Arrangers and Selling Agents for the issue, while BDO and BDO Private Bank are the other selling agents.