SBC Corporate Bonds

Limited-time offer! Earn higher returns
with a safe, medium-term investment.

Overview

The SBC Corporate Peso Bond is specifically intended to mobilize savings and encourage medium term investments.

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 Security Bank Corporation (“SECB”)
Tenor 2 years
Indicative Rate 5.875% – 6.125% p.a. (subject to 20% withholding tax)
Issue Price 100% of the face value
Interest Periods Quarterly, 30/360 day count basis
Denomination Minimum denomination of PHP 500,000 and increments of PHP 100,000 thereafter.
Taxation Interest received by investors will be net of applicable witholding tax

Why Invest in SBC Corporate Bonds?

Tradeable

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

Fixed Interest Income

Your income stream is fixed regardless of market changes.

Higher Interest Rates

Indicative rate of 5.875% – 6.125% per annum.

Eligibility Requirements

For Individual Clients

  • A clear copy of any one of the following valid identification cards (“ID”): passport, driver’s license, company ID, Social Security System ID, GSIS ID or Senior Citizen’s ID or such other ID and documents as may be required by or acceptable to the relevant Selling Agent;
  • Two fully-executed specimen signature cards in the form attached to the Application to Purchase;
  • Duly accomplished client suitability assessment forms; and
  • For aliens residing in the Philippines or non-residents engaged in trade or business in the Philippines, consularized proof of tax domicile issued by the relevant tax authority of the applicant.

For Corporate Clients

  • One (1) copy, certified by the SEC (or equivalent regulatory body) or Corporate Secretary of the applicant of the SEC Certificate of Registration, Articles of Incorporation and By-Laws or equivalent charter or constitutive documents of the applicant, as amended to date;
  • One (1) copy, certified by the Corporate Secretary or other appropriate officer of the applicant of the resolutions adopted by the applicant’s Board of Directors or equivalent body authorizing the applicant to purchase the Peso Bonds and certifying the names and specimen signatures of the applicant’s duly authorized signatories for that purpose;
  • Two (2) fully executed signature cards of the authorized signatories duly authenticated by the Corporate Secretary in the form attached to the Application to Purchase, together with a copy of at least one (1) valid ID of the authorized signatories; and
  • A list, certified by the Corporate Secretary of the applicant, of the natural persons who are the ultimate beneficial owners of the applicant; and
  • Such other documentary requirements as may be reasonably required by the Selling Agents in implementation of its internal policies regarding “knowing your customer” and anti-money laundering.

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, which has a different type of risk profile and may not be appropriate. You should not deal in fixed income securities unless you understand their nature and the extent of your exposure to the attendant risks. And even assuming that you understand the nature of these investments, you should not deal with the same unless the product is suitable for you in the light of your circumstances, experience, financial position and operational resources. 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 capability of the investor to sell its security due to limited market activity.
  3. Market Risk refers to the risk of a decrease in the value of a security due to market conditions, changes in interest levels, and changes in the price of the security. This is applicable if the investor decides not to hold on to the security up to final maturity.
  4. Reinvestment Risk refers to the possibility that the interest received from the investment may not be able to be reinvested at the same rate or return as the invested funds that generated them.
  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 possibility 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.
  7. Issuer Risk refers to the risk that certain factors specific to the issuer and its business may negatively affect or cause the price of the security go down.

To download the Offering Circular, click here.

Frequently Asked Questions

What are Peso Bonds?
Peso Bonds represent amount of indebtedness of a bank with a designated maturity. The Peso Bonds form part of a bank’s debt and rank at least pari passu with all unconditional, unsecured and unsubordinated Peso-denominated obligations of the Bank (save for any such obligation enjoying statutory preference or priority established under Philippine law).

How does it differ from a regular Time Deposit
A long-term time deposit cannot be transferred while it is outstanding; whereas a Peso Bond may be negotiated even while outstanding but only through the market maker or the organized exchange where it is listed.

Why invest in Peso Bond?
Peso Bond are specifically intended to mobilize savings and encourage medium term investments. Peso Bonds act as an alternative to time deposits.

What are some of the risks involved in investing in Peso Bonds?
Yield on the Peso Bond is fixed if the investor holds the Peso Bond until maturity. However, if an investor sells the Peso Bond in the secondary market, the Peso Bond will be subject to a price risk depending on the prevailing market rate. The prevailing price of the Peso Bond, like that of any other fixed rate negotiable instrument, may be higher or lower than the original purchase price. Applicable withholding taxes (WHT) and other fees may likewise apply.

What are the tax implications of investing in the Peso Bonds?
Tax on interest income: Interest income on the Bonds is subject to a final withholding tax at a rate of 20% subject to exemption or preferential tax rates under relevant law, regulation or tax treaty.
In case of Early Redemption by the Bank: As a consequence of the exercise of the Early Redemption Option, any incremental tax that may be due on the interest income already earned under the Initial Tranche of the Peso Bonds prior to or as a result of the exercise by the Bank of its Early Redemption Option shall be for the account of the Bank.

Why is the Bank doing a Peso Bond issuance?
The issuance is in line with the Bank’s program to diversify its funding sources and to support its lending actiivities.

Who are eligible to invest in the Peso Bonds?
Any person or entity may purchase the Peso Bonds EXCEPT the following prohibited investors:

  • the Bank, including its subsidiaries, affiliates, and the wholly or majority-owned or –controlled entities of such subsidiaries and affiliates, except for its trust departments or related trust entities, pursuant to BSP Circular No. 1010, series of 2018; or
  • non-resident aliens not engaged in trade or business in the Philippines, non-resident foreign corporations, and any person classified as a U.S. person under the U.S. securities laws regulations as well as the FATCA regulations.

For purposes of the definition of Prohibited Bondholders, a “subsidiary” means, at any particular time, a company which is then directly controlled, or more than fifty percent (50%) of whose issued voting equity share capital (or equivalent) is then beneficially owned by the Bank and/or one or more of its subsidiaries or affiliates. An “affiliate” means, at any particular time, a company at least twenty percent (20%) but not more than fifty percent (50%) of whose issued voting equity share capital is then owned by the Bank. For a company to be “controlled” by another means that the other (whether directly or indirectly and whether by the ownership of share capital, the possession of voting power, contract or otherwise) has the power to appoint and/or remove all or the majority of the members of the board of directors or other governing body of that company or otherwise controls or has the power to control the affairs and policies of that company.

How much is the minimum investment?
The Peso Bonds will be issued with a minimum investment size of PHP 500,000, with increments of PHP 100,000 thereafter.

How do I receive my principal and interest?
Investors will be required to specify in the Application to Purchase (ATP) their preferred mode of payment for the interest and principal. Options include:

  • Credit to investor’s Peso Current or Savings Account with SECB
  • Credit to investor’s Peso Current or Savings Account with another bank via RTGS

Are the Peso Bonds insured?
No, unlike LTCNDs, Peso Bonds are not insured by the PDIC.

Can the Peso Bonds be pre-terminated by the Holders?
No. Bondholders are not allowed to pre-terminate the Peso Bonds prior to stated maturity. However, they may transfer their holdings in the secondary market. Such transfer or assignment will not be considered a pre-termination. The Bank intends to list the Peso Bonds on PDEx on issue date. Assuming the successful listing of the Peso Bonds, a Bondholder may transfer the Peso Bonds through any trading participant (accredited with the PDEx) at prevailing market prices and will be subject to brokerage and other fees imposed by the trading participant.

When will investors receive interest payments on the Peso Bonds?
Investors will receive interest payments on a quarterly basis.

Is there tiered or incremental interest rate applied?
Unlike regular time deposits, where the interest rates may increase based on the amount or tenor, the Peso Bonds will offer a fixed coupon rate to all investors throughout the tenor of the Peso Bonds.

Can an investor still purchase the Peso Bonds after the public offering?
Yes. After the public offer, an investor may purchase the Peso Bonds through the secondary market. The Bank intends to list the Peso Bonds on PDEx on issue date. Assuming the successful listing of the Peso Bonds with the PDEx, an investor may purchase the Peso Bonds through any trading participant (accredited by PDEx) at prevailing market prices and will be subject to brokerage and other fees imposed by such trading participant.

What is the general process of transferring the Peso Bonds in the secondary market?
In executing a sale of the Peso Bonds, the selling Bondholder shall surrender to the trading participant its/his/her original Registry Confirmation (RC), together with the Trade-Related Transfer Form and a Letter of Instruction to Sell. The proceeds of the sale shall then be delivered to the selling Bondholder.

To effect the transfer of ownership of the relevant Peso Bonds from the selling Bondholder to the buyer, the trading participant shall (a) surrender to the Registrar selling Bondholder’s original RC for cancellation and (b) provide the Registrar with the following documents: (i) the original Investor Registration Form,(ii) the written consent of the buyer to be bound by the terms of the Peso Bonds and the rules of the Registrar and (iii) such other documents as may be reasonably required by the Registrar. The buyer shall then receive a Confirmation of Sale from the trading participant and an original RC from the Registrar.

The sellers and buyers of the Peso Bonds may be charged certain transaction related fees by the Registrar.

Is partial sale of Peso Bonds allowed?
Yes. In the event that the Bondholders would like to sell only a portion of their amount, a Trade-Related Transfer Form and Letter of Instruction to Sell will be required, provided that the required minimum denomination for Peso Bond is maintained. The original RC will be retained with the selling Bondholder. The Registrar will issue a Statement of Account for the selling Bondholder outstanding balance.

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