UnionBank of the Philippines raises P3 billion from LTNCD offering
UNIONBANK of the Philippines raised P3 billion from its longterm negotiable certificates of deposit (LTNCD), which it wants to use to improve its maturity profile and help expand its business.
At the ceremonial listing of the investment instruments on Wednesday at the Philippine Dealing System ( PDS) in Makati City, the Aboitiz- led UnionBank said it raised P3 billion from the peso- denominated issue.
The notes will mature in 5.5 years and carry an interest rate of 4.375% to be paid quarterly until August 21, 2023.
The issuance is the first tranche of UnionBank’s P20-billion LTNCD program approved by the central bank.
Like regular time deposits offered by banks, LTNCDs offer higher interest rates. However, LTNCDs cannot be pre- terminated but can be sold on the secondary market, making them “negotiable.”
In an interview, UnionBank President and Chief Executive Officer (CEO) Edwin R. Bautista said proceeds from the long-term note offering will be used for liability management and to support business expansion plans.
“Well, this signifies our continued expansion. We also need this to improve the tenor mix of our liabilities,” Mr. Bautista told BusinessWorld after the listing ceremony.
“The LTNCD is a long- term instrument [ for us] to increase the maturity profile of our deposit liabilities... You have to develop sources of funding for the longterm,” UnionBank Chief Financial Officer Jose Emmanuel U. Hilado explained.
The LTNCD offer was only the second one for the lender after it raised P3 billion worth of longterm notes in 2013.
Standard Chartered Bank arranged the deal, and also served as a selling agent together with UnionBank and Multinational Investment Corp.
Asked when the lender will issue the next tranche of the approved P20-billion program, Mr. Bautista said: “Tama na muna (It’s enough) for now. We don’t know yet.”
PDS President and CEO Cesar B. Crisol said UnionBank
is the third company of the Aboitiz group, the other two being Aboitiz Equity Ventures and AboitizPower Corp., to venture into the corporate bond market this year.
“With this listing, the Aboitiz group’s cumulative level of outstanding bonds listed will be at the level of P48 billion, representing 6% of the overall listed corporate bonds,” Mr. Crisol said.
UnionBank’s listing brings the total volume of outstanding listed securities to P759.528 billion, floated by 45 companies.
Other big banks have also raised finances via LTNCDs. In November, Bank of the Philippine Islands (BPI) listed P12.24 billion worth of long-term notes, the single largest LTNCTD offering to date.
Apart from BPI, Security Bank Corp., Philippine National Bank, East West Banking Corp. and BDO Unibank, Inc., among others have rolled out their own fundraising plans through separate note offerings announced over the past few months.