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UnionBank upsizes peso-denominated bond issue

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UNIONBANK of the Philippines has increased the issue size of its maiden peso-denominated bond issue to accommodate demand from investors.

In a disclosure to the local bourse Monday, the Aboitiz-led UnionBank said it increased the size of its peso bond issuance to P11 billion from the P10.5 billion set previously.

The total amount that the bank is set to raise is more than double the P5 billion it initially intended to issue.

“To accommodate additional demand from retail investors, UnionBank has decided to further increase the final bond issue size,” the lender said in the disclosure.

The two-year debt papers carry a coupon rate of 7.061% per annum to be paid quarterly.

The fixed-rate bonds were priced at 30 basis points over the two-year PHP Bloomberg Valuation Service government benchmark rates quoted on Nov. 21.

In a disclosure last week, UnionBank Chief Financial Officer Jose Emmanuel U. Hilado said proceeds from the bond issuance “will help support our strategic business expansion plans, while providing a new shorter-dated investment instrument to our institutional and retail clients.”

The offering marks the first tranche of the bank’s P20-billion bond and commercial paper program approved by UnionBank’s board last Aug. 31.

Banks can now raise funds with greater ease through corporate bonds as new central bank regulations do away with having to secure approval from them.

Metropolitan Bank & Trust Co. is looking to raise an additional P5 billion through another tranche of offering after raising P10 billion.

Bank of the Philippine Islands also raised P25 billion through the fixed-income debt papers, marking the first part of its P50-billion program.

UnionBank booked a P6.1-billion net profit in the first nine months, lower than the P6.4 billion recorded a year ago, due to increasing interest rates and its inability to issue credit for teachers.

Shares in UnionBank went down 50 centavos or 0.74% to close Monday’s session at P67.20 apiece. — Karl Angelo N. Vidal