SECURITY BANK Corp. is set to issue P20 billion worth of long-term negotiable certificates of deposit (LTNCD) to raise fresh funds.
It is also planning to redeem P10 billion in unsecured subordinated debt notes in July, ahead of its maturity date of 2024.
In a disclosure to the local bourse on Tuesday, Security Bank said its board of directors approved the issuance of up to P20 billion in LTNCDs.
“[It’s] still premature for us to give details,” Security Bank President and Chief Executive Officer Alfonso L. Salcedo, Jr. told BusinessWorld in a text message.
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.”
Security Bank raised P5.8 billion in May last year, marking the second tranche of its P20-billion bond program and following the P8.6 billion raised in LTNCDs in November 2017.
On Thursday, Mr. Salcedo said the bank is looking at issuing some LTNCDs and peso-denominated bonds within the second half of 2019.
“We are looking at that in the second half, not in the second quarter,” he said.
Meanwhile, the universal lender is set to exercise its option to call on its P10-billion subordinated securities on July 12, according to the regulatory filing.
Carrying a 5.375% interest rate, the unsecured subordinated notes were issued on July 11, 2014 and was supposed to mature 10 years later. The debt papers were callable after five years.
“There is step up in interest rate paid if we don’t redeem,” Mr. Salcedo said yesterday.
The central bank ordered universal and commercial banks at the start of 2014 to shore up its buffers against financial stress — a requirement under the Basel 3 regime introduced by the Basel Committee on Banking Supervision in the wake of the 2008 global financial crisis.
Call options are usually exercised to take advantage of low interest rates regimes.
Security Bank booked a net profit of P8.6 billion in 2018, down 16% from a year ago due to decrease in trading gains and higher provisions for income tax.
Shares in Security Bank closed at P172 apiece on Tuesday, up P4.30 or 2.56%. — Karl Angelo N. Vidal