UnionBank, the largest bank in the Philippines, is issuing a digital bond registered using blockchain technology. The issuance amount is at least one billion pesos ($19 million) with an expectation of PHP 9 billion and is part of a pre-announced bond program of PHP 39 billion ($745 billion).
The Philippines Depository & Trust Corp. (PDTC), the country’s central securities depository (CSD) for both equity and debt, is running a proof of concept using distributed ledger technology (DLT). Union Bank’s issuance is part of this ‘Digital Registry & Digital Depository’ trial. In other words, DLT will be the ledger of record for the bonds.
The listed 1.5-year bond has a 3.25% annual rate. HSBC and Standard Chartered are joint lead arrangers. Eighteen months ago, UnionBank and Standard Chartered co-created a blockchain platform for retail bond issuance as part of a proof of concept to tokenize PHP 9 billion in bonds. We’re guessing this is the same platform. Earlier this year, the bank partnered with IBM and digital custody firm Metaco, likely also for this project.
UnionBank is not a newcomer to blockchain. Two years ago, the country’s Treasury issued retail bonds, which piloted the UnionBank Bonds.ph mobile app for distribution where the pilot blockchain solution ran alongside the traditional route. In that case, UnionBank partnered with the Philippines Digital Asset Exchange (PDAX) for the pilot.
As far back as 2018, the bank used blockchain to enable rural banks to access the main banking network. It is also working with OneConnect, the Chinese-Singapore fintech, for AI and blockchain solutions.