Php 3.0 Billion 3.5% Long-Term Negotiable Certificate of Time Deposit (LTNCD) due January 2019
LTNCDs are negotiable certificates of deposit indicating the face value or the principal amount of indebtedness of a bank with a designated maturity. The LTNCDs constitute direct, unconditional, unsecured, and unsubordinated obligations of UnionBank, enforceable according to the Terms and Conditions thereof, and shall at all times rank pari passu and without any preference or priority among themselves and at least pari passu with all other present and future direct, unconditional, unsecured, and unsubordinated obligations of the Issuer, except for any obligation enjoying a statutory preference or priority established under Philippine laws.
The minimum features of the LTNCD as specified by Bangko Sentral ng Pilipinas (“BSP”) Circular No. 304, Series of 2001 are as follows: (1) issued in scripless form with a third party Registry Bank maintaining an Electronic Registry Book (“ERB”), (2) denominated in Philippine pesos, and (3) with a minimum maturity of five (5) years.
The initial offering shall be executed through an Underwriter or an Arranger. Subsequent negotiations in secondary trading must be executed through authorized Market Maker/s. The Bank shall pay the specified coupon or interest over the life of the LTNCD and the face value or principal amount upon maturity through the Registry Bank.
Why invest in LTNCDs?
LTNCDs are meant to mobilize savings and encourage long-term investment. For qualified individual investors, interest earned is not subject to withholding tax if the LTNCD is held for at least five (5) years. LTNCDs are negotiable, meaning they may also be bought and sold in the secondary market through a Market Maker.
What are some of the risks involved in investing in LTNCDs?
Who are eligible to invest in the LTNCDs?
Are the LTNCDs insured?
Can the LTNCD be pre-terminated by the Holders?
When will investors receive interest payments on the LTNCDs?
What is the general process for executing a sale in the secondary market via the Market Maker/s?
The Market Maker will then submit to the Registry Bank the seller's original Purchase Advise and original Registry Confirmation for cancellation.
The Market Maker will also provide the Registry Bank with the new Purchase Advise issued in favor of the buyer.
The buyer shall receive the new Purchase Advise from the Market Maker and the new Registry Confirmation from the Registry Bank.
The seller will receive its proceeds (net of taxes, if any) after three (3) business days from value date of the transaction.