BDO UNIBANK, Inc. is set to raise P5 billion worth of long-term negotiable certificates of deposit (LTNCD) to support its business expansion and extend the maturity of its funding sources.
In a disclosure to the local bourse on Wednesday, the Sy-led lender said it will offer 5.5-year LTNCDs amounting to P5 billion, with an option to increase the issue size depending on market demand.
With an indicative pricing of 5.125-5.5%, the final coupon rate will be set before or after the offer period, which will run from March 27 until April 5. However, the bank can adjust the offer period as needed.
Investors can invest for a minimum of P100,000 with increments of P50,000. Interest will be paid quarterly in arrears. The debt papers will be issued on April 12.
Like regular time deposits offered by banks, LTNCDs offer higher interest rates. However, LTNCDs cannot be pre-terminated but can be sold on the secondary market, making them “negotiable.”
These instruments are insured by the Philippine Deposit Insurance Corp. and are exempt from withholding tax, given that the papers will be held at least five years.
BDO said the fund-raising activity is part of its “efforts to lengthen the maturity of its funding sources and support business expansion plans.”
In April 2018, the country’s biggest bank raised P8.2 billion via LTNCDs, carrying an interest rate of 4.375% per annum. The offer was upsized from the initial offer of P5 billion to accommodate strong demand from investors.
Deutsche Bank AG-Manila branch will serve as the sole lead arranger of the latest LTNCD offer. It will also act a selling agent alongside BDO and BDO Private Bank. Meanwhile, BDO Capital and Investment Corp. will be the bank’s financial advisor.
BDO booked a record-high net income of P32.7 billion in 2018, up 17% from the P28.1 billion tallied a year ago, on the back of robust earnings from its core businesses.
BDO shares closed unchanged at P132 apiece on Wednesday. — Karl Angelo N. Vidal