UnionBank to conduct P10-B SRO in July

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UNIONBANK of the Philippines, Inc. is set to conduct its P10-billion stock rights offering (SRO) in July, which will raise additional capital for the lender’s growth.

UnionBank Chief Financial Officer and Treasurer Jose Emmanuel U. Hilado said the lender will conduct its SRO in “July of this year.”

“That was recently approved by the board. The plan is to issue that by July of this year,” Mr. Hilado told reporters following UnionBank’s annual stockholders’ meeting on Friday.

He said Citibank will be the arranger of the rights offer.

Earlier this month, the Aboitiz-led lender said it will be raising P10 billion via SRO.

“The additional capital will increase the common equity Tier 1 and total capital adequacy ratio of the bank,” UnionBank said in a previous disclosure to the local bourse, adding that the proceeds will be used for the continued growth of its assets.

Aside from the SRO, Mr. Hilado said the bank can tap its euro medium-term note (EMTN) program as well as long-term negotiable certificates of deposit (LTNCD) programs to raise more funds.

“The EMTN Program that we set up last year was up to $1 billion,” told Mr. Hilado. “We’ve drawn only $500 million. so we can draw another 500 million anytime”.

A medium-term debt program stands as a flexible facility for companies to issue notes in the foreign currency in 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.

Credit rater Moody’s Investors Service earlier assigned UnionBank’s EMTN program an investment-grade rating of “Baa2” with a “stable” outlook.

Aside from the foreign currency note program, Mr. Hilado added the bank can also launch another tranche of LTNCDs, noting that the long-term note program is still subject to market conditions and regulatory approval.

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 February, UnionBank raised P3 billion from LTNCDs with a tenor of 5.5 years. They carry an interest rate of 4.375% to be paid quarterly until Aug. 21, 2023.

The issuance is the first tranche of UnionBank’s P20-billion LTNCD program approved by the central bank.

UnionBank, the ninth largest commercial bank in asset terms in the country as of end-2017, logged a net profit of P2.9 billion last quarter, up 31.8% from the P2.2 posted the same period last year, on the back of sustained growth across its businesses.

UnionBank shares closed flat on Friday at P89 apiece. — Karl Angelo N. Vidal