• BDO to issue new P5B LTNCDs in H2

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    BDO Unibank Inc., the largest bank in the country, said it is planning to issue another tranche of long-term negotiable certificates of deposits (LTNCD), a P5-billion issue intended for “unsatisfied demand” of investors.

    Luis S. Reyes Jr., BDO senior vice president and head of investor relations and corporate planning, announced the plan to raise another P5 billion after the maiden listing of the bank’s P7.5 billion LTNCD on Monday.

    “It depends on the growth of our consumer loans. If the growth remains strong, then we may consider another listing at the end of this year — in the second half. Maybe another P5 billion,” Reyes said, noting that its consumer loans grew “double-digit high teens” or 15 percent to 19 percent increase last year.

    “There are unsatisfied demand. In housing, many others are looking for home ownership same as with cars. Cars are more accessible for the younger generation,” he said.

    “LTNCD is more funding, while Tier 2 is funding and capital so it depends on our capital decision. But right now, we are confident in our capital. So [the planned P5 billion issue]will be likely be the same format,” Reyes said.

    The recently-listed LTNCDs was originally P5 billion, but was upsized to P7.5 billion as the demand from investors reached to P10.5 billion.

    Selling LTNCDs is a way for banks to raise funds, usually in huge amounts. The bank is obliged to pay the face value of the certificate upon maturity, and produce periodic coupon or interest payments during the life of the deposit.

    As an investment, LTNCDs are tax-exempt for qualified individuals or institutions if held for at least five years and are covered by the Philippine Deposit Insurance Corp. (PDIC) for up to P500,000.

    The P7.5 billion LTNCDs has an interest rate of 3.75 percent yearly, set to mature in the next five years and six months from the issuance. It was issued on April 6 and is set to mature on October 6, 2020.     ING Bank N.V. Manila and Standard Chartered Bank are the appointed joint lead arrangers and selling agents, while BDO and BDO Private Bank are the other selling agents.

    The proceeds from the issue will “lengthen the maturity profile of the bank’s funding sources as well as support its medium terms growth plans.”

    The bank achieved its full year net income target as its 2014 profits reached P22.8 billion.
    BDO is the banking arm of Henry Sy, richest man in the Philippines, under the SM Group via holding firm SM Investments Corp.

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