Union Bank notes issue raises P6.8 billion

MANILA, Philippines — Aboitiz-led Union Bank of the Philippines raised P6.8 billion from its return to the domestic debt market to diversify its funding sources and finance its expansion program.

In a disclosure to the Philippine Stock Exchange, UnionBank said the amount raised was P1.8 billion higher than the original issue size of P5 billion as investors swarmed the bank’s Series A unsecured subordinated notes due 2030 eligible as Tier 2 capital.

The 10.25-year notes, callable in 5.25 years, bear an interest rate of 5.25 percent per annum. Standard Chartered Bank and HSBC acted as joint lead arrangers, bookrunners and selling agents, while UnionBank served as the limited selling agent. Asia United Bank was the market maker for the fund-raising activity.

Last December, the Bangko Sentral ng Pilipinas gave the country’s 10th largest bank in terms of assets, the green light to issue up to P20 billion worth of Tier 2 notes to within a period of one year.

The financing arm of investment holding firm Aboitiz Equity Ventures Inc. launched a P70-billion funding program consisting of offshore borrowings as well as domestic borrowings through stock rights offering and issuance of long term negotiable certificates of deposits (LNTCDs), among others, in October 2018.

The bank raised P3 billion via the issuance of LTNCDs due 2023 in February 2018 as well as P11 billion from two-year fixed rate bonds issued in December 2018 and another P5.8 billion from three-year peso-denominated bonds in June 2019.

The double-digit loan growth helped UnionBank more than double its earnings to P14 billion last year from P6.87 billion in 2018 as revenues jumped 44 percent, driven by the sustained double-digit increase in loans, substantial margin growth, and strong trading gains.

Its loan book surged by 21 percent to P393.4 billion due to the solid business expansion in small and medium enterprises with 40 percent, credit cards with 35 percent, consumer loans with 31 percent, and commercial lending with 16 percent.

Philippine banks that have tapped the domestic debt market via the Philippine Dealing and Exchange Corp. (PDEx) raised P72.6 billion via the issuance of bonds as well as LTNCDs.