UnionBank
UnionBank of the Philippines took a pioneering step in July 2021 that caught the market’s attention: it unveiled a partnership with the International Finance Corp to issue social bonds to finance small business loans.
The size of the transaction – the World Bank’s IFC invested just $150 million to start – matters less than the broader significance.
The seven-year social bond, issued under UnionBank's new sustainable finance framework, was the bank’s first and the longest-duration dollar-denominated issue. Just as important, it aimed to support more than 2,000 loans to micro, small and medium-sized enterprises.
The MSME sector has been disproportionately impacted by Covid-19. In the pre-Covid period, MSMEs accounted for more than 90% of businesses and at least 60% of all jobs. Yet loans to MSMEs only accounted for 6% of Philippine lending.
UnionBank’s president and chief executive Edwin Bautista sees the proceeds from such a bond as an innovative way for the bank to boost financing for vital sectors through its supply chain financing platform and digital technologies.
It’s a strategy that, in one fell swoop, creates jobs, strengthens and deepens the domestic capital markets, and develops a more resilient, efficient and inclusive financial system.
UnionBank