UnionBank issues LTNCDs, amounting to Php3.0 billion
Union Bank of the Philippines (UnionBank) issued today its debut offering of Long-Term Negotiable Certificates of Deposits (LTNCDs) in local currency, raising a total of Php3.0 billion.
The fixed rate LTNCDs carry a coupon of 3.50% per annum, which is payable quarterly beginning January 18, 2014. The maturity date of the LTNCDs is on April 17, 2019.
The net proceeds of the issuance will be utilized to improve the Bank’s deposit maturity profile and support business expansion plans.
The Hongkong and Shanghai Banking Corporation Limited was the Sole Lead Arranger and acted as Selling Agent, together with UnionBank and Multinational Investment Bancorporation.
“UnionBank continues to show commitment to its customers by providing wider choices of investment assets such as these LTNCDs, which offers higher yields as compared to other types of instruments due to lesser intermediation costs, while lengthening the Bank's maturity profile,” said UnionBank president and chief operating officer Victor B. Valdepeñas.
LTNCDs are negotiable certificates of time deposits and are tax exempt for qualified individuals if held for at least 5 years. The LTNCDs are insured by the Philippine Deposit Insurance Corporation (PDIC) up to a maximum coverage per depositor, currently at Php500,000. These are bank products with long tenors, usually 5 to 10 years, which are offered to investors looking for a higher interest rate compared to regular savings accounts or shorter-term deposits.
UnionBank was hailed as the Domestic Cash Management Bank of the Year for the Philippines by the Asian Banking & Finance Wholesale Awards on July 18, 2013, cementing its leadership in providing cash management solutions. The recipients of the awards were decided by representatives from PricewaterhouseCoopers, KPMG, Deloitte Consulting, Ernst & Young Advisory Llp. and Accenture.
Fitch Ratings, on August 7, 2013, upgraded UnionBank’s outlook to “Positive” from “Stable”. According to the rating agency, this reflects the Bank’s “strong core capitalization, improving loan loss reserves, as well as its sound funding, liquidity and domestic franchise as a medium-sized player”. Fitch also said that the positive rating actions on UnionBank were also driven by the Bank’s ongoing recovery efforts in reducing burden of legacy non-performing assets (NPAs), and rising loss-absorption buffers in recent years with higher-than industry Tier 1 and Total capital adequacy ratios at 16.7% and 19.5%, respectively, as of end-June 2013.