Union Bank raises $300 million as notes offering swamped

MANILA, Philippines — Union Bank of the Philippines raised $300 million in a successful return to the offshore debt market as investors swarmed the notes offering.

The fund raising activity was 4.3 times oversubscribed, with orders from 117 quality institutional investors reaching $1.3 billion. The five-year notes were allocated predominantly to Asia at 84 percent and the remaining 16 percent to Europe, Middle East and Africa.

The US dollar-denominated Regulation S senior unsecured notes with a fixed coupon of 2.125 percent were priced at 195 basis points above the five-year US Treasury yield and 35 basis points tighter than initial price guidance.

Union Bank president and chief executive officer Edwin Bautista said the bank last tapped the offshore debt market almost three years ago when it raised $500 million through the issuance of five-year senior notes maturing on November 2022.

The country’s 10th largest lender in terms of assets doubled its medium term note program to $2 billion from $1 billion when it was established in November 2017

“It allows us to strengthen our maturity profile and diversify currency of funding if there are opportunities,” Bautista said, hinting the bank could raise another $1.5 billion depending on opportunities.

The Aboitiz-led bank has been raising funds via the onshore and offshore debt markets to diversify its funding sources and finance its expansion program over the past few years. It has also raised P26.6 billion via the domestic debt market since 2018.

In the first half, Union Bank hiked its provision for impairment losses to P6.99 billion in anticipation of the potential impact of the COVID-19 pandemic on its loan book. The amount was more than 19 times the P364 million it allocated for loan losses in the same period last year.

As a result, the bank’s net income slipped six percent to P4.5 billion despite the 55 percent jump in revenues to P22.1 billion, driven by the sustained increase in net interest income, as well as higher trading gains.