The Philippines has successfully returned to the international capital markets for the first time in 2023 with its $3 billion triple-tranche US dollar bond sale.
According to a message shared by Finance Secretary Benjamin Diokno to reporters yesterday, the order book peaked at $28.2 billion for the global bond offer. The transaction was thus upsized from an initial target issue size of $2 billion.
“The blockbuster reception and tight pricing achieved in all tranches of our latest offering, despite coming on the heels of curtain-raisers done by other big-name sovereigns, reaffirms the distinction of Philippine credit as favored proposition even in times of uncertainties in the market landscape. It is both a reward for our masterful navigation of the pandemic crisis and a motivation to become a beacon for growth in a period of dimming global prospects,” Rosalia de Leon, national treasurer, said in a statement yesterday.
The new 5.5- and 10.5-year tranches were priced at 105 basis points (bps) over treasuries area and 145 bps over area with a coupon of 4.625 percent and 5 percent, respectively, 50 bps tighter than the initial price guidance of 155 bps and 195 bps over area.
The 25-year sustainability tranche was priced at 5.5 percent at par, 45 bps tighter than the initial price guidance of 5.95 percent area.
This transaction follows the Philippines’ $2 billion triple-tranche bond offering in October 2022, 70.1 billion yen four-tranche Samurai bond offering in April 2022 and $2.25 billion triple-tranche bond offering in March 2022.
The transaction is expected to settle on January 17, 2023.
“The robust demand for our first international bond offering in 2023 represents a strong vote of confidence by international investors. It is a testament to the republic’s sound economic fundamentals and the resilience of our economy in the face of volatile global financial markets. We are pleased to see international investors’ recognition of the Philippines’ strong economic recovery, sound fiscal policies and sensible socioeconomic agenda to promote sustainable and inclusive economic growth,” Diokno said.
“As a seasoned issuer in the international bond markets, the Republic has once again received astounding interest across all tranches of the offering. The continued engagement of high-quality global investors has been encouraging as it demonstrates strong confidence for the republic’s long term growth trajectory and sustainability commitments,” Finance Undersecretary Mark Dennis Joven, for his part, said.
Use of proceeds from the issuance will be for general budget financing, while the 25-year sustainability bond will also be used to “finance/refinance assets in line with the republic’s sustainable finance framework.”
Meanwhile, the Bureau of the Treasury (BTr) also decided to fully award the reissued 25-year treasury bonds during yesterday’s auction.
With a remaining term of 12 years and eight months, the security fetched an average rate of 7.182 percent, lower than the original coupon rate of 8 percent set on its first issue in September 2010 as well as the comparable secondary market benchmarks.
The bonds were 5.3 times oversubscribed, attracting total tenders of P185.2 billion compared to the P35 billion offering. With its decision, the BTr was able to raise the full program. – Angela Celis
