Union Bank Issues $150M Social Bond

Tens of thousands of jobs are expected to be created over the next seven years through a new social bond to be issued by one of the Philippines’ leading banks to help smaller businesses recover from the impacts of COVID-19.

IFC is investing US$150 million in a seven-year social bond to be issued by Union Bank of the Philippines (UnionBank, PSE: UBP), the country’s seventh-largest private-sector bank. The bond, which will be issued under UnionBank’s new sustainable finance framework, will be the first social bond by the bank and its longest-term USD-denominated bond to date.

It also marks only the second social bond of its kind in the Philippines. Proceeds from the bond are expected to finance over 2,000 loans to micro, small and medium-sized enterprises (MSMEs), which have been disproportionately impacted by COVID-19.

IFC’s investment will also help UnionBank boost financing for MSMEs through its supply chain financing platform, enabled using digital technologies.

“Our goal in issuing this bond is to support the recovery of MSMEs from the COVID-19 pandemic,” said Jose Emmanuel Hilado, Chief Financial Officer of UnionBank.

“We are confident that we can achieve this through the use of IFC’s long-term funding and by leveraging our supply chain financial platform. It could not have come at a better time, as this market segment has been hit particularly hard by the current crisis.”

In the Philippines, MSMEs accounted for over 90 percent of businesses and over 60 percent of jobs preCOVID-19, but MSME loans only accounted for 6 percent of total bank loans in the country. This makes increasing access to MSME financing critical to fostering a resilient and inclusive recovery.

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