BSP okays UnionBank issuance of P10-B debt notes

MANILA, Philippines - The Bangko Sentral ng Pilipinas has approved Union Bank of the Philippines’ issuance of up to P10 billion in debt notes qualifying as Tier 2 capital under the stricter Basel 3 measures.

In a disclosure,to the Philippine Stock Exchange,  the Aboitiz-led bank said the notes will have a maturity of 10 years and three months from the date of issuance.

The papers will also have a fixed rate based on the “relevant market rates” estimated at the five-year Philippine Dealing System Treasury Reference Rate PM (PDST-R2) benchmark.

At the same time, the notes will have a loss-absorption feature which means they can be written off or converted to equity in case of a trigger event or a point of non-viability as determined by the BSP.

The board of UnionBank has approved the issuance of said notes in May. The bank said then that its growing business highlights the need to raise more capital.

The bank has tapped BDO Capital and Investment Corp. as the issue manager and lead underwriter, as well as selling agent.

China Banking Corp. will also serve as an underwriter and a selling agent, while Deutsche Bank AG Manila Branch will be the transaction’s registry and paying agent.

UnionBank has also tapped Multinational Investment Bancorp. as a selling agent and market maker. The Development Bank of the Philippines - Trust Services Group, meanwhile, will be the trustee.

The debt notes qualify as capital under the Basel 3 standards, which universal banks started complying with during the start of the year.

Basel 3 is an updated set of reform measures meant to strengthen the regulation, supervision and risk management of banks. In January this year, the BSP required banks to meet new capital standards under the Basel 3 package.