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Robinsons Bank no longer keen on issuing LTNCDs

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ROBINSONS BANK Corp. said it may no longer tap its long-term negotiable certificates of deposit (LTNCD) program, as market players are now interested at parking their funds in shorter-term corporate bonds.

Robinsons Bank President and Chief Executive Officer Elfren Antonio S. Sarte said the Gokongwei-led lender is reluctant to offer LTNCDs given that banks are now allowed to offer fixed-rate notes.

“Chances are we might not issue [LTNCDs] already,” Mr. Sarte said in a recent interview. “It… might be difficult to attract investors when banks are already issuing corporate bonds.”

In August, the Bangko Sentral ng Pilipinas (BSP) simplified the process for universal and commercial banks looking to raise funds via bonds through Circular No. 1010.

The relaxed regulations allowed lenders to issue fixed-rate bonds without having to secure central bank approval, a part of streamlined rules designed to deepen capital markets.

Prior to this, banks usually offer LTNCDs, which carry a tenor of at least more than five years to be tax-exempt. LTNCDs cannot be pre-terminated but can be sold on the secondary market, making them “negotiable.”

The BSP allowed Robinsons Bank to raise P5 billion through LTNCDs, which can be done in multiple tranches. In July last year, the lender raised P1.78 billion through the first tranche, carrying an interest rate of 4.875% to be paid quarterly.

“We can still issue, but I think I have a meeting with the board to discuss the direction. My personal preference is to do bonds and not go to LTNCD because it’s limiting,” Mr. Sarte added.

Robinsons Bank is considering to issue corporate bonds, although it is still deciding on the issue size.

“Chances are we will go corporate bonds, which is now what the market is accepting, and where there are more institutional investors,” Mr. Sarte noted.

Metropolitan Bank & Trust Co., Bank of the Philippine Islands as well as UnionBank of the Philippines have recently peso-denominated instruments to diversify funding sources and expand its businesses. BDO Unibank, Inc. likewise will issue today its fixed-rate bonds amounting P35 billion.

Meanwhile, Security Bank Corp. and Philippine National Bank have also established their own peso-denominated bond programs worth P50 billion and P100 billion, respectively, to be issued through tranches.

The Gokongwei-led bank booked a P292.4-million net income in the nine months ended September, 32% higher than the P222.2 million recorded in the same period last year.

Robinsons Bank is licensed as a commercial lender and is the 19th biggest in the industry in asset terms as of end-September. — Karl Angelo N. Vidal