Unionbank offering P10 billion in bonds
Union Bank of the Philippines (Unionbank) has launched a P10-billion dual-tranche bond offer ahead of an anticipated interest rate cut.
In a stock exchange filing on Wednesday, the Aboitiz-led bank said it would offer a minimum of P5 billion per tranche, with an option to release more in case of high demand.
The offer is composed of 1.5-year Series H bonds due 2026 at a 5.88-percent yield per annum, and three-year Series I bonds due 2028 at a 6.02-percent yield per annum.
These will be offered from June 4 to June 19, and issued, settled and listed on the Philippine Dealing and Exchange Corp. on June 26.
This comes as the market anticipates another interest rate cut, which can make fixed-income securities like bonds more attractive since these often carry higher yield for investors.
ING Bank NV Manila Branch, Philippine Commercial Capital Inc. and Standard Chartered Bank were tapped as joint lead arrangers and bookrunners for the transaction.
The offer is part of Unionbank’s P100-billion bond program that was established in April 2019.
Back then, it had an initial size of P39 billion, but this was increased to P50 billion in October 2023. Unionbank doubled this to P100 billion last month, allowing it to tap more funds for future projects.
Bond boost
The upsized bond program comes as the Bangko Sentral ng Pilipinas (BSP) continues its monetary policy easing cycle. So far, the BSP has slashed rates for overnight borrowing by 25 basis points this year to 5.5 percent, although it has hinted at two more cuts.
The country’s ninth-largest bank likewise confirmed it would raise up to $800 million from the offshore debt market amid plans to boost the coffers of its digital banking arm.
This is part of its $2-billion euro medium-term note program approved in October 2020. This was also upsized from $1 billion in November 2017.
In the first quarter, Unionbank’s bottom line tumbled by 28.5 percent to P1.4 billion due to one-time, tax-related costs. Revenues grew by 4 percent to P19.4 billion.
Net interest income, on the other hand, improved by 14.4 percent to P15.4 billion as the bank grew its consumer lending portfolio, with credit cards, personal loans and teachers’ loans growing the fastest.
