China Bank looks to raise up to P20B from LTNCDs

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CHINA BANKING Corp. (China Bank) will raise up to P20 billion through the issuance of long-term negotiable certificates of deposit (LTNCD) to support asset generation and expansion.

In a disclosure to the local bourse on Thursday, the Sy-led bank said its board of directors approved on Wednesday the issuance of P20 billion in LTNCDs.

The long-term debt paper of at least five years and a day could be issued in several tranches.

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.”

China Bank said proceeds will be used to “support the bank’s asset generation plans and expansion programs.”

“The objective is to lock in long-term funding and use the proceeds to support the expansion plans of the bank,” China Bank Head of Corporate Planning and Investor Relations Alexander C. Escucha said in a text message.

He added that the potential timing of the said issue is sometime in the fourth quarter, subject to the approval of the Bangko Sentral ng Pilipinas and favorable market conditions.

Last year, China Bank raised P10.25 billion from the first tranche of its P20-billion LTNCD program.

China Bank offered last month at least P5 billion via a 1.5-year maiden fixed-rate bond offering, which ended last June 28.

The bonds, which will be listed on the Philippine Dealing & Exchange Corp. on July 10, carry an interest rate of 5.7% per annum to be paid on a monthly basis until January 2021.

HSBC and Standard Chartered served as the joint lead arrangers for the transaction. The foreign banks also acted as selling agents alongside China Bank, China Bank Capital and Amalgamated Investment Bancorporation.

The bond issue marks the first tranche of China Bank’s P75-billion fund-raising program for the next three years to support its expansion and strategic initiatives.

The bank booked a P1.9-billion net income in the first quarter, up 24% year-on-year, driven by robust expansion of its core businesses.

Shares in China Bank stood at P27.25 apiece on Thursday, down 15 centavos or 0.55% from the previous close. — Karl Angelo N. Vidal