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UnionBank to issue $1B under MTN program

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UnionBank

By Melissa Luz T. Lopez, Senior Reporter

UNIONBANK of the Philippines, Inc. (UnionBank) will soon foray into the global market by issuing foreign currency debt papers, as part of its fresh fund-raising exercise to support the bank’s debt management and lending activities.

In a disclosure, the listed lender announced that it will be issuing as much as $1 billion under a euro medium-term note (MTN) program.

A medium-term debt program stands as a flexible facility for corporates to issue notes in the foreign currency in the global capital markets, allowing them to tap a bigger avenue for their fund-raising activities. These debt papers are offered on a continuing basis until such a time when the ceiling amount is reached.

A euro MTN means the borrowings will be issued abroad except in the United States and Canada, and may be offered in a wide range of currencies apart from the greenback.

Apart from this offering, UnionBank will raise another P20 billion by offering long-term negotiable certificates of deposit (LTNCDs) locally.

These debt instruments are similar to regular time deposits which offer higher interest rates, but the difference is that these cannot be pre-terminated. Being “negotiable” means that these can be traded at the secondary market prior to maturity date.

UnionBank President and Chief Operating Officer Edwin R. Bautista said the new borrowing platforms would beef up the bank’s portfolio that will allow them to hand out bigger loans, particularly to finance big-ticket infrastructure projects.

“We have one year to issue the LTNCD. Proceeds will help lengthen our funding maturity profile and allow us to meet our customers need for longer tenor loans,” Mr. Bautista said in a text message.

“This will allow us to extend more term loans to clients with infrastructure projects.”

Earlier this year, Mr. Bautista bared plans to put up a foreign currency-denominated investment product through its new partnership with the Swiss-owned wealth and asset manager Lombard Odier.

The Aboitiz-led lender reported a P2.15-billion net income during the second quarter, which was 6.85% lower than the P2.31 billion recorded a year ago and from the P2.21 billion seen during the first three months of the year.

Earnings totalled P4.4 billion during the first six months, which jumped by 11% from the P3.9 billion booked during the same year-ago period amid steady increases in the bank’s core businesses.

Total assets held by the bank stood at P553 billion as of end-June, the bank previously reported. Total loans reached P265 billion, while deposits also climbed to P434 billion.

UnionBank shares closed at P86.55 each yesterday, down 10 centavos or 0.12% from P86.65 apiece on Friday.