SECURITY BANK Corp. started an offer of at least P5 billion in long-term negotiable certificates of deposit (LTNCD) yesterday, part of a bigger fund-raising program targeted to boost its operations.

The listed lender said in a disclosure yesterday that the LTNCDs up for offer have a tenor of five-and-a-half years and will be marketed at an indicative rate of 3.875%.

The final interest rate of the instruments will be determined during the offer period, which is set to run until Oct. 30.

Minimum denominations that investors may place have been set at P50,000 and increments of P10,000 thereafter.

The lender said it “may upsize the transaction depending on demand.” It will list the LTNCDs at the Philippine Dealing and Exchange Corp. “to provide secondary market liquidity to investors who would like to trade the instruments.”

Security Bank said it is holding investment road shows for the LTNCDs, which kicked off in Clark, Pampanga yesterday and will be followed by another in Davao today and in Cebu on Oct. 19.

Hongkong and Shanghai Banking Corp. and Standard Chartered Bank were assigned as joint lead arrangers and bookrunners, and will also act as selling agents together with Security Bank and Multinational Investment Bancorporation, the listed bank said.

The LTNCD offer is part of the P20-billion issuance that the Bangko Sentral ng Pilipinas approved on Oct. 5.

“CDs (Certificates of deposit) have been an effective way for banks to raise cost-effective funding, while offering a new investment product to their own deposit base, most of whom are looking for long term assets that provide higher yields than traditional time deposits,” Security Bank said.

LTNCDs, like the regular time deposits, offer higher interest rates. Unlike time deposits, however, LTNCDs cannot be pre-terminated. They are called “negotiable” because they can be sold at the secondary market.

Security Bank’s last LTNCD issuance was in August 2012, when the bank was able to successfully raise P5 billion from the instruments, more than its initial P3-billion offer.

The lender posted a net income of P5.2 billion in the first half, up 8% from the P4.9 billion posted in the same six months in 2016. In the second quarter alone, its bottom line surged 32% to P2.43 billion from P1.85 billion last year.

Shares in Security Bank gained P7 on Tuesday to P266.8 apiece, up 2.69% from its previous finish. — EJCT

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