UNIONBANK of the Philippines is set to raise P20 billion through issuance of peso-denominated debt instruments to raise fresh funds.
In a regulatory filing on Thursday, the Aboitiz-led lenders said its board of directors approved during its regular meeting the issuance of bonds or commercial papers amounting to P20 billion.
UnionBank said the fundraising activity can be done in multiple tranches.
Banks can now raise fresh funds through corporate bonds with greater ease starting this month, as new rules do away with having to secure approval from the Bangko Sentral ng Pilipinas to deepen domestic capital markets.
On Monday, the Sy-led BDO Unibank, Inc. announced that it set up a peso-denominated bond program of up to P100 billion, even as it said it has no definite timeline yet for an issuance.
A number of banks have been tapping the capital markets in recent months to raise more funds ahead of tighter risk management measures that will take effect on Jan. 1, 2019 under the international Basel 3 framework.
UnionBank earlier said it will conduct a stock rights offering this month, raising about P10 billion by offering 158.8 million common shares priced at P62.97 apiece.
The additional capital will boost the lender’s common equity Tier 1 and capital adequacy ratios, the bank said.
Aside from this, the lender also raised P3 billion from long-term negotiable certificates of deposit (LTNCD) in February, the first tranche of its approved P20-billion program.
It also secured $500 million from its offering of global notes in November last year.
Currently, banks prefer issuing LTNCDs to raise additional funds. However, these actually entail bigger costs compared to soliciting other forms of investments as these are actually time deposits and come with a higher reserve requirement rate.
Other lenders such as Philippine Savings Bank, Robinsons Bank Corp., China Banking Corp. and East West Banking Corp. have recently issued long-term notes to support its funding needs.
Shares in UnionBank closed at P75.80 apiece on Thursday, down 10 centavos or 0.13%. — Karl Angelo N. Vidal