By James A. Loyola
BDO Unibank, Inc. (BDO) is raising P5 billion from a planned offering of Long-Term Negotiable Certificates of Deposit (LTNCD) as part of efforts to lengthen the maturity of its funding sources and support business expansion plans.
In a statement, BDO said it has the option to increase the issue size, depending on market demand. BDO had issued P8.2 billion worth of LTNCDs in May last year.
This latest tranche of LTNCDs will have a term of five and a half years with indicative pricing of 5.125 percent to 5.50 percent. 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 be from March 27 up to April 5, with the issue date set for April 12, 2019. The Bank however, 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.
These securities 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.
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) is the Sole Lead Arranger and Selling Agent for the issue, while BDO and BDO Private Bank are the other selling agents. BDO Capital and Investment Corp. serves as BDO’s financial advisor.