UnionBank raising P30 billion via bond issue

MANILA, Philippines — Aboitiz-led Union Bank of the Philippines is raising another P30 billion via the issuance of bonds or commercial papers as part of its debt liability management program and at the same time augment the listed bank’s loan book.

“Proceeds will be used to fund our loan growth and manage our liabilities’ maturity profile,” UnionBank president and chief executive officer Edwin Bautista said in a text message.

The bank’s board of directors also extended Bautista’s term to end-December 2022.

The country’s ninth largest bank in terms of assets has yet to finalize the timetable and other details of the fund raising activity.

Last December, the listed bank raised P11 billion from is maiden peso fund offering, more than double the initial volume of P5 billion. The two-year fixed rate bonds, which have a coupon rate of 7.061 percent per annum to be paid quarterly, were priced at 30 basis points over the two-year Bloomberg Valuation service (BVAL) government benchmark rate.

Proceeds of the fund raising activity as part of its initial P20-billion bond and commercial paper program would help support the bank’s strategic business expansion plans, while providing a new shorter dated investment instrument to institutional and retail clients.

The bank controlled by listed Aboitiz Equity Ventures Inc. (AEV) launched a P70 billion funding program last October consisting of offshore borrowings as well as domestic borrowings through the stock rights offering, issuance of long term negotiable certificates of deposits (LNTCDs), among others.

UnionBank has so far raised half of its $1 billion medium term note program successfully tapping $500 million last November.

Aside from the P11 billion from the bond issuance in the offshore market, it also raised P3 billion last February from the first tranche of its P20-billion LNTCD offering to improve the bank’s debt maturity profile and help grow its business portfolio.

UnionBank also raised P10 billion through a stock rights offering to fund majority of the projected loan availments as well as other business growth.

The bank’s net income slipped 13.1 percent to P7.32 billion last year from P8.42 billion in 2017 amid the double-digit increase operating expenses as well as change in reporting standards.