Peso Corporate Bonds

Earn higher returns with a safe, long-term investment.

Overview

Peso Corporate Bonds are medium to long-term investments issued by SEC-Registered Philippine corporations.

Additional Features:

  • Earns fixed interest rate
  • Higher interest rate compared to government securities
  • Tradable in the open market

Key Features

Looking for a medium-term investment with a higher interest rate? This is for you.

Issuer SEC-Registered Philippine Corporations
Tenor 5, 7, 10 years
Redemption Price At par (or 100% of face value)
Interest Rate Prevailing Market Rate
(Subject to 20% final withholding tax
except for tax-exempt institutions)
Interest Payment Quarterly or Semi-Annually
Minimum Investment Php 50,000 and in increments of P10,000 thereafter

Why Invest in Peso Corporate Bonds?

Tradeable

You can buy/sell the bonds in the open market.

Fixed Interest Income

You earn fixed interests or coupons on pre-defined dates

Higher Interest Rates

Earn more than 4.75% per annum!

Compare Fixed Income Securities
Peso Corporate Bonds Treasury Bills (T-Bills) Retail Treasury Bonds (RTBs) Fixed Rate Treasury Notes Dollar Sovereign Bonds Dollar Corporate Bonds
Liquidity Medium High High High Medium Medium
Available Terms 5, 7, 10 years 91, 182 or 364 days 3-25 years 3-25 years 5-25 years 5-25 years
Interest Payment Quarterly or Semi-annually In Advance Quarterly Semi-annually Semi-annually Semi-annually
Issuer SEC-registered Philippine Corporations Philippine Government Philippine Government Philippine Government Philippine Government or Other Governments Philippine Corporations or Other Foreign Corporations

Ready to Invest?

Terms and Conditions

While fixed income securities are considered alternative investment products that can provide relatively higher yield than other traditional bank products, one must still consider if such product is appropriate to your risk profile, financial capability and have a good understanding of the basic features of the instrument. The following is a brief summary of certain risk considerations which you should take into account in deciding whether to purchase fixed income securities. This list is not exhaustive; rather it is intended to highlight certain risks that could be related to your investment.

  1. Credit Risk / Issuer refers to the risk associated with the issuers capability to meet its debt obligations.
  2. Liquidity Risk refers to the ability to buy or sell the instrument in the open market in a limited time frame
  3. Market Risk refers to the risk of a decrease in the value of a security due to market conditions, changes in the price of the security. Investor is exposed to such risk if he decides to sell the security prior to maturity.
  4. Reinvestment Risk refers to the risk of not being able to reinvest the couponearned and eceived from the security at the same interest rate.
  5. Sovereign Risk refers to the risk associated with political and economic events which may adversely impact the security.
  6. Call Risk refers to the risk that the issuer may exercise its option to redeem the bond before maturity. This may shorten the tenor of the Investors intended investment and force the client to settle reinvesting at a lower rate of return.
Frequently Asked Questions

What are Fixed Income Securities?

Fixed income securities are a form of investment that pays out a fixed rate of income over time with the full investment amount returned upon maturity. You can enjoy the benefits of having a stable source of passive income with minimal risk. It’s the perfect investment option that allows you to grow your income regardless of changes in current market performance.

What is the minimum investible amount for fixed income securities?

PHP-denominated Corporate Bonds: PHP 50,000.00, in increments of PHP 10,000.

What is the difference between coupon rate and yield-to-maturity?

a. Coupon rate is expressed as the percentage (per annum basis) of the face value of the bond. It is the amount that the bondholders will receive for holding the bond. Coupon payments are usually made semi-annually or quarterly. b. Yield-to-maturity (YTM), as the name states, is the rate of return that the investor/bondholder will receive, assuming the bond is held until maturity. YTM accounts for various factors like coupon rate, bond prices, and time remaining until maturity, as well as, difference between the face value and price. Coupon rate is fixed at the issue date, whereas the YTM fluctuates due to market movement and the aforementioned factors. YTM is the better measure of return if the investor decides to trade in the secondary market.

Will there be liquidity, should I want to unload my securities?

Yes, you may sell your securities in the secondary market provided that there is a buyer. Since corporate issued securities can be traded in the secondary market, those who want to sell his holdings can do so before its maturity date at the market rate.

What do I do if I wish to terminate or sell my fixed income investments prior to its maturity?

Termination is subject to prevailing market rates, so your investments might be sold at a discount, par, or premium. Termination will have to be coursed through a Broker Bank’s salesman. The client will have to comply and submit all documentary requirements before the sale of securities can be executed.

Why is the settlement amount different from the face value?

Face amount, also known as par value, is the amount that the bondholder will receive at maturity date assuming the issuer of the bond does not default. On the other hand, the settlement amount is the amount that the bondholder pays or receives for the face value; it accounts for the accrued interest, taxes and applicable fees. When a security is traded at a discount (YTM > Coupon rate), the settlement amount may be less than the face amount. On the other hand, when a security is traded at a premium, (YTM < Coupon rate), the settlement amount is greater than the face amount.

Can Fixed Income Securities be used as collateral for loans?

Fixed income securities, both USD- and PHP-denominated, may be used as loan collateral at a certain percentage (%) of the face value depending on the type of security and the bank’s credit guidelines.

What documents do I need to submit if I want to purchase and/or sell fixed income securities?

Buying Corporate Bonds in the primary market or during the Offer Period requires the submission of the following:

Purchasing: Application to Purchase form, PDTC Specimen Signature Sheet, valid government ID and corporate documents for corporate investors

Buying and selling the Corporate Bonds in the secondary market requires the submission of the following:
Purchasing: Investor Registration Form, Letter of Instruction (LOI) for Peso Fixed Income Securities and PDTC Specimen Signature Sheet
Selling: Trade Related Transfer Form, Letter of Instruction (LOI) for Peso Fixed Income Securities and Confirmation of Sale

Note: Additional documents may be required by the Bank or Custodian to facilitate the execution of the transaction.

What is the cut-off time to execute trade transactions?

All Security Bank branches can assist with buy or sell transactions, but execution of transactions are done at the Head Office. Transactions done on or before 11:30 AM for transactions are value-dated same day. Transactions done after cut-off time are for settlement the next banking day.

What do you mean by “on-the-run” and “off-the-run” issues?

“On-the-run” securities are the most recent issues of a particular maturity. Conversely, “off-the-run” securities are the opposite. “On-the-run” securities are generally more liquid than “off-the-run” securities.

Why are Government Securities considered “credit risk-free”?

Government Securities are backed by the full taxing power of the national government and its ability to print money, hence they are practically “default-free”.

Given the same tenor, is it better for me to invest in corporate bonds than Government Securities?

It depends on the client’s risk appetite. Government securities virtually have little to no risk as these are obligations of the national government. Chances of the government defaulting, though still possible based on history, is relatively unlikely. Corporate bonds, on the other hand, may carry more risk than government securities.

What is the difference between a Custodian and a Registry?

A custodian and a registry are either BSP-accredited banks or non-bank financial institutions. A custodian holds the securities on behalf of the client, while the registry records the initial and succeeding transfer of ownership of securities.

How will the securities be transferred upon purchase?

During settlement date, the securities will be delivered by the seller to the buyer or to its BSP-accredited custodian once all documentary requirements have been submitted.

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