Union Bank of the Philippines (UnionBank) raised P18.168 billion through the dual tranche offering of peso-denominated fixed-rate bonds amid strong demand from investors.
The issuance was the bank’s largest from its P50-billion bonds program. Strong demand from both retail and institutional investors enabled it to upsize the issuance to over nine times its initial minimum offer size of P2 billion for the two tranches.
“Fuelled by our passion to address the needs of our customers, we introduced the bond exchange program to provide a reinvestment option for existing investors,” Johnson Sia, treasurer and head of UnionBank’s global markets, said in a statement.
“We are grateful for the support of our investors as their confidence in the bank allowed us to raise our largest peso bond issuance to date,” Sia said.
The 1.5-year Series F Bonds due 2025 raised P10.3385 billion with an interest rate of 6.5625 percent per annum, while the 3 year Series G Bonds due 2026 raised P7.8295 billion with an interest rate of 6.6800 percent.
Concurrent with the issuance of the new bonds, UnionBank also implemented the country’s first public non-sovereign bond exchange which extended to the holders of its P8.115 billion 2.750 percent fixed-rate Series C Bonds due Dec. 9, 2023 the option to sell to UnionBank such exchangeable bonds in exchange for subscription to any of the new bonds.
The bond exchange settlement date is scheduled Dec. 4, 2023, with P236.7 million of exchangeable bonds to be exchanged with the new bonds. The new bonds will be issued and listed on the Philippine Dealing & Exchange Corp. on Dec. 5, 2023. Julito G. Rada
ING Bank N.V., Manila branch and Standard Chartered Bank are the joint lead arrangers and bookrunners for the new bonds. They are also the selling agents for the offering of the new bonds together with UnionBank.
UnionBank is one of the largest lenders in terms of assets. In the first nine months of 2023, UnionBank’s net profit declined 19.8 percent to P8.1 billion from P10.1 billion a year ago as operating costs increased 63 percent year-on-year to P33.5 billion due to the full-year impact of the acquired Citi consumer business and UnionDigital.
UnionBank president and chief executive Edwin Bautista said their diversified consumer business allowed them to cover for the one-time costs of the bank.
Net revenues amounted to P52.8 billion, up by 48 percent versus the same period last year. Net interest income grew 34 percent to P37.3 billion, largely attributed to the 18-percent increase in loan portfolio.
Consumer loans grew faster at a pace of 22 percent year-on-year. The bank has one of the highest proportions of consumer to total loans in the industry at 56 percent, resulting in an above-industry net interest margin of 5.3 percent.
Non-interest income grew by 93 percent to P15.5 billion, largely due to recurring fee-based income on customer transactions. Its customer base has now reached over 13 million, averaging over 2 million new customers per year from 2019.
Total assets as of September 2023 amounted to P1.1 trillion, up by 8 percent from September 2022. Net loans and receivables climbed by 18 percent to P531.0 billion, while total deposits grew by 6 percent to P724.7 billion.
