Financial Blog

What are STCPs?

STCPs are debt instruments issued by corporations for the purpose of raising funds to finance the company’s short term obligations (e.g. payment of payroll, importation of raw materials, inventories). These instruments are issued as part of a continuous rolling program. Tenor varies from 30, 60, 90, 180 (and so on) but has a maximum tenor of 360/365 days.

Why should you invest in STCPs?

Liquidity- You can easily buy and sell it in the secondary market through selling agents like banks, subject to prevailing market prices.

Short term commitment- A viable option for investors looking to lock in their funds for a short period of.

Low risk- Given the tenor of the instrument. investors are exposed to a relatively low-risk than a longer-tenored corporate bond.

Thus, STCPs can be a viable alternative for retail fixed-income investors who are looking for a short term investment that yields return higher than traditional bank products such as time deposits.

Where can you subscribe to STCPs?

STCPs are available for primary subscription for a limited time only. An “Offer Period”, scheduled by the issuer and the underwriters, is the time in which the STCPs are first sold to the public and at par through selling agents like banks. After the issue date, STCPs are still available for sale in the secondary market. STCP prices, however, are subject to fluctuation influenced by prevailing market factors. 

You must have a Philippine Peso account with a bank if you want to subscribe to STCP. You can open a new one or assign an existing Security Bank account where the principal payment and interests will be credited.

Can you sell your STCPs before the date of maturity?

Yes, because STCPs are marketable securities. You can endorse it to another retail investor or sell it back to the selling agent.

How do you invest in STCPs?

1. Inquire at your bank of choice. Take note that not all banks offer STCPs, so it’s important to check with your bank if this type of investment is being offered.
2. Fill out the required forms. Complete an application form which will be available during the offer period from the bank/selling agent. The requirements include a purchase application, client information sheet, and photo IDs.
3. Pay the discount value. Your subscription amount, which is based on the discounted price, will be deducted from your designated or newly opened Philippine Peso Account with the bank. When the STCP reaches maturity, 100% of the principal will be credited to your bank account.