Union Bank’s return to overseas bond market raises $300M

Aboitiz-led Union Bank of the Philippines has raised $300 million in low-cost funds from a warmly received bond offering that marked its return to the overseas market for the first time since 2017.

Union Bank disclosed to the Philippine Stock Exchange on Friday that the notes due October 2025 had been priced to yield 2.125 percent a year, about 195 basis points above comparable five-year US Treasury bonds.

Due to strong demand, the local bank was able to price the bonds at a rate 35 basis points tighter than the initial guidance.

Union Bank said the book-building attracted 117 quality institutional investors, bringing in over $1.3 billion worth of orders, equivalent to an oversubscription of 4.3 times the base offer.

Investors from Asia gobbled up most of the bonds, accounting for 84 percent of the total. Investors from Europe, Middle East and Africa took up the remaining 16 percent.

Citigroup Global Markets Ltd., MUFG Securities Asia Ltd. and Standard Chartered Bank were the joint lead managers and joint bookrunners for this offering.

The bonds are rated by Moody’s investor at Baa2 (stable), two notches above the minimum investment grade.

This transaction has allowed Union Bank to lock in low-cost funds by drawing down from its newly enlarged $2-billion medium term notes (MTN) program. This MTN program allows an issuer to offer notes or perpe­tual capital securities in series or tranches from time to time.

—DORIS DUMLA0-ABADILLA