BDO raising P5 billion via LTNCD issuance

MANILA, Philippines — BDO Unibank Inc. is raising at least P5 billion via the issuance of long-term negotiable certificates of deposits (LTNCDs) as part of efforts to diversify its funding sources and support its business expansion plans.

The country’s biggest lender said in a disclosure to the Philippine Stock Exchange (PSE) the latest tranche of LTNCDs would have a term of five and a half years with an indicative rate in the area of 3.75 percent.

BDO said the final coupon rate would be set at the end of the offer period on Sept. 20. Issue date is on Sept. 27.

“The bank, however, reserves the right to shorten the offer period, and has the option to increase the issue size, depending on market demand,” it said.

The bank has tapped ING Bank NV Manila Branch (ING) is the sole arranger and selling agent for the issue. Other selling agents include BDO and BDO Private Bank.

BDO raised P7.32 billion via the issuance of LTNCDs last April.

Last February, BDO raised P35 billion as investors gobbled up its bond offering aimed at supporting the bank’s expansion and at the same time diversifying its funding sources.

The amount accounted for more than a third of its P100 billion bond program launched last August. The transaction represents the largest ever single peso bond issuance by a Philippine bank, following the bank’s $150 million Green Bond in 2018.

BDO also raised P8.2 billion from the issuance of long-term negotiable certificates of time deposits (LTNCTDs) in May last year.

In 2017, the bank also raised P60 billion via stock rights offering and $700 million via the issuance of senior notes in the offshore debt market.

LTNCDs are negotiable certificates of deposit with a designated maturity, and represent a bank’s obligation to pay the face value upon maturity, with periodic coupon or interest payments during the life of the deposit.

LTNCDs are an attractive investment especially for individuals, as interest income is exempt from withholding taxes if the LTNCDs are held for at least five years, based on current regulations.

BDO has the country’s largest distribution network, with more than 1,300 operating branches and over 4,000 ATMs nationwide. It also has full-service branches in Hong Kong and Singapore, as well as 23 overseas remittance and representative offices in Asia, Europe, North America and the Middle East.