Two of the country’s largest banks are looking to raise funds via the issuance of long-term negotiable certificates of time deposits (LTNCDs)
Security Bank Corp. said the Monetary Board had given the go-ahead for a plan to issue up to P20 billion in LTNCDs, while Philippine National Bank (PNB) announced that it was offering a third tranche under an approval granted last year.
“This gives Security Bank the flexibility to raise long-term funding, diversify its funding sources, lengthen the tenor of its liabilities, and support future growth,” the bank said in a statement on Wednesday.
It said the first tranche would be issued this month or at a date to be determined depending on Bangko Sentral ng Pilipinas approval and prevailing market conditions.
The bank’s chief executive officer, Alfonso Salcedo, told reporters in August that the first tranche would likely be “around P5 billion to P10 billion.”
“Regarding tenor of the paper, we have yet to determine the tenor. This would be at least longer than five years, but not beyond seven years,” he added.
Third tranche for PNB
Also on Wednesday, PNB said it would be raising as much as P3 billion in fresh funds in line with the Monetary Board’s October 2016 approval of a plan to issue up to P20 billion in LTNCDs.
“We wish to inform the exchange that Philippine National Bank is offering a third tranche of Long-Term Negotiable Certificates of Time Deposits due April  2023,” it said in a disclosure.
The six-year LTNCDs will carry a 3.75 percent to 3.87 percent indicative yield payable quarterly. The offer will run from October 11 to 19 with the issue date set for October 26.
Hongkong and Shanghai Banking Corp. (HSBC) Ltd. and ING Bank N.V., Manila Branch are the joint lead arrangers and bookrunners for the issuance.
Selling agents are PNB, HSBC, ING, and Multinational Investment Bancorporation. PNB Capital and Investment Corp. is the financial advisor for the offering.
LTNCDs, which are subject to approval by the central bank, are similar to time deposits but have longer maturities and higher yields. These instruments are negotiable and are insured with the Philippine Deposit Insurance Corp. up to the maximum coverage, which is currently at P500,000 per depositor.
Selling LTNCDs is a way for banks to raise capital without having to sell shares. The bank is obliged to redeem the face value of the certificate upon maturity and pay out periodic coupons 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.
With MAYVELIN U. CARABALLO