UnionBank raises P5.8 B from bond issuance

MANILA, Philippines — Aboitiz-led Union Bank of the Philippines raised P5.8 billion via the issuance of three-year peso-denominated bonds as investors swarmed the bank’s fund raising activity.

The amount was almost double the minimum P3 billion issue size. The series B fixed rate bonds due 2022 carry a coupon of six percent per annum.

Edwin Bautista, president and chief executive officer of UnionBank, said in a text message the fund raising activity was two times oversubscribed, prompting the bank to upsize the volume to P5.8 billion.

“The total issuance will be P5.8 billion,” Bautista told The STAR.

British banking giant HSBC and and Dutch financial giant ING Bank N.V. served as the joint lead arrangers and bookrunners of the transaction.

The proceeds from the fund-raising activity would be used to lengthen UnionBank’s funding maturity profile. The bonds would be listed on the Philippine Dealing and Exchange Corp. (PDEx) on Monday.

The fund raising is part of the bank’s P20-billion bond or commercial paper program approved last year.

The bank already raised P11 billion last December with the issuance of two-year fixed-rate bonds with a coupon rate of 7.061 percent per annum.

A sharp rise in the bank’s operating and interest expenses slashed its net income by 26 percent to P2.16 billion in the first quarter from P2.93 billion in the same quarter last year.

As of end-March, total assets of the Aboitiz-led bank breached the P700 billion mark as customer loans reached P315 billion with retail loans accounting for more than one-third of total loans.

Philippine banks have been tapping the onshore debt market via the issuance of peso-denominated bonds as well as long term negotiable certificates of deposits (LTNCDs) to raise funds to bankroll their expansion programs and beef up their respective loan books.

Listed BDO Unibank Inc. raised P35 billion from the issuance of senior fixed rate notes due 2023 and another P7.32 billion from LTNCDs.

Metropolitan Bank & Trust Co. (Metrobank) also raised P17.5 billion via the sale of fixed rate bonds due 2022 followed by Rizal Commercial Banking Corp. (RCBC) with P15 billion from the issuance of ASEAN green bonds due 2020.

On the other hand, Philippine National Bank raised P13.87 billion from the issuance of bonds due 2021 and another P8.22 billion from LTNCDs due 2023.