Retail magnate Lucio Co-led Philippine Bank of Communications has joined the bandwagon of banks locking in long-term funding by offering high-yielding deposit notes.
In a disclosure to the Philippine Stock Exchange yesterday, PBCOM said its executive committee had approved the filing of an application to raise as much as P5 billion from an offering of long-term negotiable certificates of deposit (LTNCDs).
The issuance, which will be done in one or more tranches, is subject to the approval of the Bangko Sentral ng Pilipinas.
In the disclosure, PBCOM said the proceeds of the planned issuance would be used by the bank for “general corporate funding, especially long-term lending.”
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LTNCDs are negotiable certificates of time deposit issued by banks. They carry higher yields compared to regular time deposits or savings accounts.
Unlike regular time deposits, LTNCDs cannot be preterminated by holders. However, investors can negotiate or transfer their holdings in the secondary market prior to maturity. Interest on LTNCDs is tax-free for individual investors if the instrument is in the name of the individual holder and is held for at least five years.
