UnionBank eyes P20B from bonds, CPs

Union Bank of the Philippines is raising as much as P20 billion within the year as it shifts to bonds or commercial papers under a funding program that involves tapping both offshore and onshore markets.

The board of directors of the Aboitiz-led bank approved last Wednesday the issuance of bonds or commercial papers in multiple tranches of up to P20 billion.

UnionBank president and CEO Edwin Bautista said in a text message the timing of the fund raising activity is within the year.

The bank, controlled by listed Aboitiz Equity Ventures Inc. (AEV), launched a P70 billion funding program last October consisting of offshore borrowings as well as domestic borrowings through the stock rights offering, issuance of long term negotiable certificates of deposits (LNTCDs), among others.

UnionBank has so far raised half of its $1 billion medium term note program, successfully tapping $500 million last November.

It also raised P3 billion last February from the first tranche of its P20-billion LNTCD offering to improve the bank’s debt maturity profile and help grow its business portfolio.

“We intend to shift to bonds, away from LTNCDs, as long term peso funding sources because of lower reserves and more flexibility,” Bautista said.

BSP Governor Nestor Espenilla Jr. said the regulator expects banks to shift to the issuance of bonds and commercial papers instead of LTNCDs in tapping the domestic capital market.

UnionBank is also raising another P10 billion through a stock rights offering this month to fund majority of the projected loan availments as well as other business growth.

The bank is set to sell 158.8 million common shares to existing shareholders at P62.97 per share. Existing shareholders would be entitled to one rights share for every 6.6644 common shares held.