UnionBank is world's 6th biggest digital bond issuer—OMFIF


Aboitiz-led UnionBank of the Philippines has landed among the world's top issuers of digital bonds, according to the ranking of economic think tank Official Monetary and Financial Institutions Forum (OMFIF).

In the OMFIF Digital Monetary Institute's Digital Assets 2024 report launched on Sept. 17 (Tuesday night, Manila time), UnionBank ranked sixth globally in terms of digital bond issuance volume, with $209.3-million worth.

To recall, UnionBank in 2022 issued the Philippines' first-ever digital peso bonds, raising P11 billion or 11 times bigger than the P1-billion minimum offer size. These bonds had a 1.5-year tenor, hence already matured last year, and carried a fixed interest rate of 3.25 percent per annum.

UnionBank said back then that its pioneering foray into digital bonds allowed the country's currently ninth-largest bank in terms of assets to trailblaze in digitization and positive disruption in the domestic banking industry, especially in digitally-based asset offerings.

This UnionBank fund-raising was the pilot user of the Philippine Depository and Trust Corp.'s (PDTC) proof of concept digital depository and registry, which utilized blockchain technology/distributed ledger for depository and registry operations.

Among OMFIF's top 10 digital bond issuers to date, UnionBank was the lone from Southeast Asia.

The No. 1 digital bond issuer so far is the European Union's (EU) European Investment Bank (EIB), with a total volume of $1.1 billion across three deals.

The government of Hong Kong Special Administrative Region (HKSAR) was in second place, with $853.1 million raised from five digital bond issuances.

Switzerland-based investment banking giant UBS was in third position ($539.3 million from two deals); the Washington-based multilateral lender World Bank ranked fourth ($328.9 million from two issuances); and the city of Lugano in Switzerland, at fifth ($220.8 million from two deals).

French financial services firm Société Générale was in seventh place with $178.1-million worth, although it tied with the Hong Kong government in topping the number of digital bond deals, also with five.

Rounding up the top 10 were the German state-owned development bank KfW ($129.1 million from two issuances); as well as the cantons of Basel City and Zurich in Switzerland, whose one deal each raised $120 million and $114.3 million, respectively.

"In the debt capital markets, many of the world's leading banks, technology companies, advisers, consultants, law firms and platforms are devoting significant resources to the development of digital bonds and the creation of a market that brings speed and efficiency for issuers and investors," the London-based OMFIF noted in the report.

"To date, that investment has resulted in a growing, but still limited, number of digital bond deals, many of which have been important pilots and learning processes for those involved," OMFIF said.

For OMFIF, the digital bond market "is likely to rapidly mature over the coming years—we expect the number of participants to grow, but those who have taken early leads may have acquired early advantages of experience and comfort with the operational challenges of a new medium."

OMFIF's Digital Assets 2024 report—which also ranked bookrunners, exchanges, legal advisors, and platform providers—covered digital bond deals during the period Jan. 1, 2022 to July 25, 2024.