Banks to raise funds via LTNCDs

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THE Philippine National Bank (PNB) and Security Bank Corp. will raise fresh funds by offering long-term negotiable certificates of deposit (LTNCD) this month, which will support the banks’ operations and help the bank manage existing debts.

In separate disclosures, the two lenders said they are pushing through with their respective fund-raising activities by offering the debt papers to investors.

LTNCDs are similar to regular time deposits which offer higher interest rates, but the difference is that these cannot be pre-terminated. Being “negotiable” means that these can be traded at the secondary market prior to maturity date.

The Lucio C. Tan-owned PNB yesterday started its offer of debt notes worth at least P3 billion, marking the third tranche of amount approved by the central bank in November 2016.

The LTNCDs will be offered until Oct. 19, and will mature by April 26, 2023. The debt instruments will earn interest ranging from 3.75% to 3.875% per annum, with the proceeds to be paid on a quarterly basis, the bank told the Philippine Stock Exchange.

PNB’s offering aligns with the bank’s liability management as it would effectively extend the maturity of outstanding debts, while also raising more funds to sustain operations.

The Hongkong and Shanghai Banking Corp. Ltd. and ING Bank N.V. Manila Branch will stand as joint lead arrangers for the issuance, and will also stand as selling agents alongside PNB and the Multinational Investment Bancorporation.

Meanwhile, Security Bank Corp. is also looking to launch its own LTNCD offering this month after it secured the approval from the Bangko Sentral ng Pilipinas to float as much as P20 billion in long-term notes.

The central bank’s approval paves the way for the listed lender to kick off their first offering within a year. The bank said they intend to launch the first tranche within October.

Security Bank said the LNTCD issuance provides the bank with “flexibility to raise long-term funding, diversify its funding sources, lengthen the tenor of its liabilities, and support future growth.”

Security Bank is the fifth-largest bank in the Philippines with assets worth P774.388 billion, followed by PNB on the sixth spot with a P773.646-billion asset base as of end-June, according to BSP data.

Security Bank reported a P5.2-billion net income from January to June, up 8.1% from its net earnings during the comparable period in 2016.

On the other hand, PNB booked P2.7 billion in net profit during the first semester, albeit 37% lower than the P4.3 billion income a year ago in the absence of one-off gains.

PNB shares went down to P57.25 apiece yesterday from P57.35 previously. Meanwhile, shares in Security Bank closed the session unchanged at P250.20 each. — Melissa Luz T. Lopez