BDO raises P8.2B from LTNCDs

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BDO raises P8.2B from LTNCDs
BW FILE PHOTO

BDO Unibank, Inc. raised P8.2 billion from its long-term negotiable certificates of deposit (LTNCD), which it wants to use to manage the bank’s liabilities.

At the ceremonial listing of the investment instruments on Monday at the Philippine Dealing System (PDS), the Sy-led BDO said it raised P8.2 billion from the peso-denominated issue.

The notes will mature in 5.5 years and carry an interest rate of 4.375% to be paid quarterly until Nov. 7, 2023.

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.”

Last month, the country’s biggest lender raised the size of its LTNCD offer to P8.2 billion from the original P5 billion amid robust demand from both retail and institutional investors.

The offering booked total subscriptions of P12.3 billion, more than twice the offer the bank initially intended.

Shortly after the bell-ringing ceremony, BDO senior vice-president Dalmacio D. Martin said proceeds from the long-term note offering will be used for liability management.

“For us, it allows us to better manage our liability mix and liability profile,” Mr. Martin told reporters, adding that the long-term notes provide investors “a whole new product to invest in” which is exempted from tax.

“If they hold it more than five years and one day, it’s tax-exempt as opposed to time deposits which are subject to 20% withholding tax. There is a clear net interest advantage to the investors.”

BDO last raised funds via LTNCDs in August 2017 and raised P11.8 billion — double the original P5-billion plan. These notes carry a 3.625% interest rate and will mature on Feb. 18, 2023.

BDO’s listing brings the total volume of outstanding securities listed at the Philippine Dealing & Exchange Corp. (PDEx) to P862.88 billion, floated by 47 companies.

“With this issuance, the SM Group’s total outstanding amount of bonds listed shall be P180.77 billion for share of 21% of the total face amount of [the total outstanding volume of securities] listed in the PDEx,” PDS Chief Operating Officer Antonino A. Nakpil said.

BDO shares closed at P128.50 each on Monday, up 50 centavos or 0.39%. — Karl Angelo N. Vidal