IFC commits $100 milllion to UnionBank’s first sustainability bonds

MANILA, Philippines — Aboitiz-led Union Bank of the Philippines is set to issue its first sustainability bond, with the International Finance Corp. (IFC) subscribing to $100 million to expand financing for small businesses and environmentally sustainable projects.

The World Bank Group’s private sector arm said the investment would be earmarked for growing UnionBank’s green and social assets.

“This landmark sustainability bond builds on our strong and continuing partnership with IFC and reflects UnionBank’s commitment to advancing our sustainable finance agenda,” UnionBank treasurer and global markets head Johnson Sia said in a disclosure.

Proceeds from the bond issuance will be used to provide loans to micro, small and medium enterprises (MSMEs) and finance projects involving renewable energy, energy efficiency and green buildings.

The disclosure did not specify the bond’s total issue size, tenor, pricing or issuance timetable. It said the bond would adhere to the Sustainability Bond Principles of the International Capital Market Association.

“Following our successful collaboration on UnionBank’s first social bond, this second partnership with IFC strengthens our ability to support sustainable finance borrowers so they can grow their businesses, create jobs and contribute to inclusive growth in the Philippines,” Sia said.

The planned issuance marks UnionBank’s second thematic bond transaction with the IFC.

In 2021, IFC invested $150 million in UnionBank’s first social bond, a seven-year issuance that sought to extend financing to MSMEs affected by the COVID-19 pandemic. The previous transaction supported more than 3,000 loans to small businesses.

Unlike the earlier social bond, the latest issuance will finance a combination of social and environmental assets, allowing UnionBank to further diversify its sustainable finance portfolio.