UnionBank of the Philippines launches country’s first digital bond offering

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UnionBank of the Philippines (UBP), one of the largest banks in the Philippines, has become the first financial institution in the country to utilize blockchain technology to issue bonds. UnionBank has launched its public offer of digital peso bonds.

In a May 23 press release filed with its disclosure to the Philippines Stock Exchange, the bank revealed that the bonds will have a minimum issue size of PHP1 billion (about $19 million at current exchange rates).

The public offering will last from May 24 to May 27. The bonds will then be issued on June 20, 2022, at which time they will also be listed on the Philippines Dealing and Exchange Corporate. (PDEx) for trading in the PDEx Fixed Income Market.

The bonds will have a tenor of 1.5 years, and holders will earn a fixed rate of 3.5% per annum. The bonds are being issued as part of UnionBank’s 36 billion pesos Bonds Program.

UnionBank further noted that the move is made possible by its partnership with the Philippines Depository and Trust Corporation (PDTC). The bank is a pilot user of the PDTC’s proof of concept (POC) Digital Registry and Digital Depository. The PDTC platform utilizes blockchain technology for registry and depository operations.

“(UnionBank) has always been among the first to embrace technological innovations to empower its customers. It embraces the future of banking and is dedicated to being the Philippines leading digital assets bank to best serve the growing needs of Filipinos everywhere,” the press statement said.

It also named the Hongkong and Shanghai Banking Corporation Limited (HSBC) and Standard Chartered Bank (SCB) as the joint lead arrangers and bookrunners on the transaction. The two banks are also joint selling agents for the offering.

UBP pioneering digital currency adoption in Southeast Asia

UBP has long been open to digital currency adoption. As far back as 2018, the bank launched a stablecoin called the UPX. In January, the bank also announced plans to launch digital currency trading and custodial services as reported by Bloomberg.

The bank, which has over $15 billion in assets under management, has often highlighted that there is a lot of enthusiasm for digital currency adoption among Filipinos. However, more education is needed for both investors and regulators.

Amidst the growing adoption of digital currencies, market regulators have warned of the dangers of digital currencies. The Bangko Sentral ng Pilipinas (BSP), the country’s central bank, has issued several warnings to banks and consumers. It has highlighted the risks of digital currency Ponzi schemes, scams, and play-to-earn games going bust.

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