PNB to issue P5-B LTNCDs

MANILA, Philippines - Philippine National Bank (PNB), the banking unit of business tycoon Lucio Tan, has been granted approval by the Bangko Sentral ng Pilipinas (BSP) to issue long-term negotiable certificates of time deposit (LTNCD) worth up to P5 billion.

Ina disclosure to the Philippine Stock Exchange, PNB said it would use the proceeds from the LTNCD issuance to fund various activities to improve banking operations.

“PNB’s issuance of peso-denominated LTNCDs will be used for general corporate purposes and to further strengthen banking operations,” it said.

PNB said it has yet to determine the issue date  as it waits for the right timing.

“PNB plans to launch the offer in the coming weeks, subject to favorable market conditions and compliance with regulatory requirements,” it said.

LTNCD is a form of bank product offered to investors looking for a relatively safe investment asset with a higher interest rate compared to a regular savings account or short-term time deposit.

As an investment instrument, LTNCDs are very similar to time deposits and bonds but differ with regard to several features.

LTNCDs are similar to time deposit accounts in the sense that they have both known maturities and fixed interest rates. As opposed to a regular time deposit, however, an LTNCD has a longer maturity.

Unlike time deposits, LTNCDs cannot be preterminated. Investors need to wait until the maturity date before they can get their principal back. Alternatively, investors can sell their LTNCDs to other willing buyers since LTNCDs are negotiable.

Aside from PNB, a number of other banks have also been issuing LTNCDs as these financing instruments would not only help them raise additional funds but also provide clients with an alternative way of investing their money.

BDO Unibank Inc. earlier indicated plans to issue up to P10 billion worth of LTNCD within the year.

Earlier, RCBC, East West Bank, Union Bank and Metrobank have also signified interest to issue LTNCDs.