BDO, SECB raises over P6B in LTNCD sales

The demand allowed it to price the certificates at 4 percent despite rising interest rates and broader market volatility

Listed lenders BDO Unibank Inc. and Security Bank Corp. secured P6.5 billion and P6.06 billion from their respective issuance of long term negotiable certificates of deposit (LTNCD), an upsize from their initial issue size of P5 billion.

In a disclosure to the stock exchange on 23 September, BDO said it secured P6.5 billion of fresh funds on the back of solid demand primarily from retail investors. The issuance is seen to support BDO’s efforts to diversify the maturity of its funding base as well as support expansion plans.

BDO’s latest LTNCD tranche carries a term of five and a half years and has a final interest rate of 4 percent per annum. The issue date is set on 27 September 2019, while the certificates will mature on 27 March 2025.

The lender tapped ING Bank, N.V., Manila Branch acted as the sole arranger and selling agent for the offer, while BDO and BDO Private Bank are the other selling agents.

Meanwhile, Security Bank raised P6.06 billion in its LTNCD offer, higher than the announced issue size of P5 billion due to demand from retail and institutional investors.

According to the lender, the demand allowed it to price the certificates at 4 percent “despite rising interest rates and broader market volatility.”

The offering is the first tranche of Security Bank’s P20 billion approval from the Bangko Sentral ng Pilipinas. The issue date was set on 23 September while maturity date is slated on 23 March 2025. The issuance was likewise part of Security Bank’s efforts to diversify funding sources and support business expansion plans.

Deutsche Bank AG, Manila Branch was the sole lead arranger and selling agent for the issuance, assisted by Security Bank. In June, Security Bank also secured P18 billion from the issuance of fixed-rate peso corporate bonds due 2021, which it planned to use to support lending activities and diversify funding base.

LTNCD are attractive investment for individuals as the interest income is exempt from withholding tax if the LTNCD are kept for at least five years.