UnionBank of the Philippines raises $208M via blockchain-backed bond offer

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Philippines-based Digital bank UnionBank of the Philippines has made significant strides in blockchain technology adoption recently. On May 31, the bank raised PHP11 billion (U.S.$208 million) in the first-ever digital peso bond offering in the country. 

The raise comes amidst a volatile rate regime in the country, making it even more significant for the bank. In a press release, UnionBank remarked on the importance of the raise for the Philippines. For one, it is a significant milestone for digital public bond offering and issuance. 

The raise also marks a successful proof of concept (POC) pilot for the utilization of distributed ledger/blockchain technology in automating an operationally efficient local capital market. Jose Emmanuel Hilado, treasurer and head of global markets at the bank, said: “This pioneering issuance serves as a building block in UnionBank’s journey to embrace digitization and positive disruption in the industry. I am confident that this will be recognized globally as a game-changing digital initiative in the field of finance.”

The release also highlighted that the raise saw “robust participation” from both retail and institutional investors. The PHP11 billion (U.S.$208 million) raised is an 11x increase from the initial minimum offer size of PHP1 billion (U.S.$18.9 million), as the initial offering announcement made last month projected. 

The details of the offering remain the same, however. The bond, as announced, has a tenor of 1.5 years and a fixed rate of 3.5%. It is available for trading on the Philippine Dealing & Exchange Corp. (PDEx) Fixed Income Market. 

The Hongkong and Shanghai Banking Corporation Limited (HSBC) and Standard Chartered Bank (SCB) are the joint lead arrangers and book-runners on the transaction, and UnionBank joins the two as selling agents for the offering. 

Why the bond offering is revolutionary for blockchain adoption

A distinguishing feature of the bond offering is that it is issued on the blockchain, specifically STACS blockchain developed by an eponymously named Singapore startup. STACS blockchain is designed to be interoperable with the digital registry and digital depository of the Philippine Depository & Trust Corp. (PDTC). The bond issuance is, however, not UnionBank’s first adventure with digital assets. 

The bank received a license from the Bangko Sentral ng Pilipinas (BSP) to operate as a digital bank last year. Earlier this year, Bloomberg disclosed that UnionBank planned to launch digital currency trading on its platform called UnionDigital. 

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