UNIONBANK of the Philippines, Inc. (UnionBank) on Monday started offering digital peso bonds, the first of its kind in the country, to raise at least P1 billion in fresh funds.
“The offering is the first digital bond issuance in the Philippines, a result of UnionBank’s partnership with the Philippine Depository & Trust Corp. (PDTC) to be a pilot user of PDTC’s Proof of Concept Digital Registry & Digital Depository that utilize the distributed ledger/blockchain technology for registry and depository operations,” the lender said in a disclosure to the stock exchange on Monday.
The digital bonds have a 1.5-year tenor and carry a fixed interest rate of 3% per annum.
The offer will be issued out of UnionBank’s P39-billion bond program.
The bonds will be offered from May 23 to May 27, unless adjusted by the bank. They will be issued and listed on the Philippine Dealing and Exchange Corp. on June 2 for trading in the fixed-income market.
The joint lead arrangers and bookrunners for the transaction are The Hongkong and Shanghai Banking Corp. Ltd. and Standard Chartered Bank. They will also be selling agents along with UnionBank.
Blockchain uses fully digital and decentralized ledgers to record transactions. This distributed ledger also serves as the platform where virtual currencies are transacted.
The storage units used in blockchain are continuously updated and secured using cryptography, making data management and other data-driven processes decentralized, tamper-proof and more transparent.
Use cases in the financial industry that involve blockchain technology include fraud reduction, Know-Your-Customer processes, trading platforms, and even payments.
In 2019, UnionBank launched a cross-border remittance service for rural banks using blockchain technology. The lender also said in 2018 that it is using blockchain for some of its internal processes.
UnionBank recorded a lower net profit in the first three months of the year as trading gains normalized. Its net income dropped by 45% to P2.6 billion in the first quarter from P4.72 billion in the same period of 2021.
Shares in the Aboitiz-led bank declined by P1 or 1.23% to close at P80 apiece on Monday. — K.B. Ta-asan