UnionBank easily raises P9B from latest bond offering

Aboitiz-led UnionBank of the Philippines has raised P9 billion from a local bond offering that was upsized by three times the original target to meet strong demand from the cash-awash market.

The latest issuance of fixed rate bonds via a dual tranche offering is the third part of UnionBank’s P39-billion bond program.

The three-year tenor raised a total of P8.115 billion, carrying an interest rate of 2.75 percent per annum, while the 5.25-year tenor raised P885 million at an interest rate of 3.375 percent annually.

“The third drawdown from the bank’s program is part of our ongoing efforts to extend term liabilities, expand funding base, and also support its business expansion plans,” UnionBank senior executive vice president, chief financial officer and treasurer Jose Emmanuel Hilado said in a press statement on Thursday.

The bonds will be issued and listed on the local fixed income trading platform, Philippine Dealing and Exchange Corp., on Dec. 9.

The issuance also marks the first dual-tranche offering issued under the Bangko Sentral ng Pilipinas’ Circular No. 1010, which simplifies the process for banks’ issuance of bonds. Moreover, UnionBank’s 5.25-year tranche is also the longest tenor bank-issued bond to date.

HSBC and Standard Chartered Bank were the joint lead arrangers and bookrunners. Together with UnionBank, they are also the selling agents for the offering.

UnionBank grew its net profit in the third quarter by 11 percent year-on-year to P4.2 billion on higher earnings from core lending and fee-based businesses. This brought January to September net profit to P8.5 billion, nearly matching last year’s level despite higher provisions set aside for probable loan losses this challenging year.

UnionBank had set aside P7.5 billion in loan-loss buffer for the nine-month period, much higher than the P484-million impairment losses booked in the same period last year.

This earnings performance for the nine-month period translated to a return on equity of 11.6 percent.

The bank grew its loan book by 3-percent year-on-year to P355.8 billion during the nine-month period. On the funding side, deposit-taking activities expanded by 29 percent year-on-year to P539.9 billion. This suggested that for every peso generated by the bank as deposits, it turned 66 centavos into earning assets through its lending facilities.

As of end-September, UnionBank’s total assets stood at P758 billion, 11-percent higher than last year’s level.