Union Bank of the Philippines (UnionBank) has recently acquired bonds valued at over P200 million. The bonds, which were issued three years prior, effectively completed its dual-tranche bond offering.
In a press statement, the Aboitiz-led bank said that it has bought P236.7 million worth of its Series C bonds as part of a bond exchange program for its new dual-tranche issue of series F and series G notes.
Once settled this December, the entire outstanding amount of Series C bonds will be worth P7.878 billion.
It can be recalled that UnionBank raised P8.115 billion in 2020 by issuing three-year notes with a 2.75 per cent interest.
As part of the program, holders of fixed-rate Series C bonds will now have the opportunity to subscribe to either of the 1.5- or 3-year bonds in exchange for selling the exchangeable bonds to UnionBank.
Bond program as part of a fund-raising effort
After re-entering the local bond market, UnionBank also plans to raise at least P2 billion by issuing 1.5- or 3-year fixed-rate bonds that are due in 2025 and 2026, respectively.
The P50 billion bond program of UnionBank includes the fund-raising effort. With an oversubscription option, each tranche will be provided with a minimum aggregate principal amount of P1 billion.
The 1.5- and three-year bonds, which have interest rates of 6.5625 per cent and 6.68 per cent annually, respectively, went on sale to the public last November 29. They were also listed on the Philippine Dealing and Exchange Corp. (PDEx) last December 5.
Before this, UnionBank increased the size of its bond program by 28%, from P39 billion to P50 billion.
In order to fulfil its goal of becoming a top consumer bank, the proceeds from the bond program will be utilized to finance the migration of the purchased Citi consumer banking business in addition to ongoing improvements to its digital channels and feature development.
UnionBank’s earnings experienced a 20% decline from January to September due to a P3.6 billion blow resulting from the integration of Citi’s consumer division.
Nevertheless, the bank was still able to report P8.1 billion in net income for the first nine months this year, P2.02 billion less than P10.12 billion it recorded for the same period last year.
As one of the six digital banks granted a license by the Bangko Sentral ng Pilipinas (BSP), UnionBank concentrated on the smooth integration of the purchased Citi consumer business and the commercial debut of UnionDigital last year.