What are LTNCDs?
LTNCD or Long Term Negotiable Certificate of Deposit
is a long-term instrument sold by Security Bank perfect for those
looking for a safe investment with high returns and want the flexibility
of a negotiable instrument. It is a hybrid bank product touted to be a
safe long-term investment It is a hybrid product in a sense that much
like a time deposit, it
is issued by a bank and is covered by the PDIC. Like a bond, it is
negotiable, long-term, and has quarterly interest payments.
Offer Period: October 17-30, 2017
Issue Date: November 8, 2017
As mandated by the BSP, LTNCDs are to be denominated in Philippines
Pesos, have a minimum maturity of 5 years, be scripless in form, and
registered with a third party Registry Bank maintaining an Electronic
Registry Book.
Breaking down the acronym
Beneath the mouthful (and downright confusing) investment term lies a
fairly uncomplicated asset class you could definitely add to your
portfolio for diversification. Let’s zoom in on each word.
- Long-term: maturity date usually comes after 5 years or so.
- Negotiable: can be sold in the secondary market, even before maturity date.
- Certificate of Deposit: like a Certificate of Deposit (CD), LTNCDs also earn interest, and is a debt instrument.
- Deposit: as a bank deposit product, it is insured by the PDIC.
What’s the difference between Time Deposit and LTNCD?
- A regular time deposit can mature within a month or up to 7 years, is
non-transferable while outstanding, and can be pre-terminated (although
subject to a penalty fee). LTNCDs take a minimum of five years or more
to reach maturity, can be sold to the secondary market at the prevailing
market price, and cannot be pre-terminated prior to maturity.
Why invest in LTNCDs?
- Higher yield/Low risk. Rates on an LTNCD are higher than short
term deposits. The yield on the LTNCD is assured if you hold onto it
until maturity. As a bank product, LTNCDs are covered by the Philippine
Deposit Insurance Corporation on a maximum insurance coverage of up to
P500,000 per depositor.
- Tax-exempted. Individuals who purchased the LTNCD from the
primary market will be tax-exempt, provided that they hold the LTNCD for
at least 5 years.
- Negotiable. It can be sold to the secondary market even before reaching maturity at the current market price.
- Steady cash flow. Investors receive interest payments on a quarterly basis.
To know more or to apply, visit Security Bank LTNCD
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