The Philippine government has successfully tapped the international capital markets for the first time this year despite volatility in the global markets, through its $2.25 billion triple tranche bond offering, the Bureau of the Treasury (BTr) said.
Rosalia de Leon, national treasurer, said yesterday the government has successfully priced the dollar-denominated global bond offering — with $500 million accounted for by the five-year bonds, $750 million by the 10.5-year paper and $1 billion for the 25-year global bonds — issued under the Sustainable Finance Framework.
The transaction marks the Philippines’ debut Environmental, Social and Governance Global (ESG) Bonds offering and its first triple tranche US dollar offering.
“The fact that our debut sustainability bond tranche secured the strongest demand among the three tranches highlights the strong investor confidence in the national government’s commitment to achieving sustainable development and mitigating climate change, notably the pledge to reduce our greenhouse gas emissions by 75 percent by 2030,” Finance Secretary Carlos Dominguez said in a statement yesterday.
“This debut sustainability bond float not only attracts the private sector-based investment needed to finance the climate change mitigation and adaptation projects in the Philippines, but also allows the government to attract funds from ESG-conscious investors and boost the development of the sustainable financing market in the Philippines,” he added.
The transaction is expected to settle on March 29, 2022.
The new five-year global bonds were priced at US Treasury spreads of T+ 90 basis points (bps) with a coupon of 3.229 percent, while the new 10.5-year global bonds were priced at T+ 125 bps and a coupon of 3.556 percent.
The new 25-year global bonds were priced at 4.2 percent, which is 50 bps tighter than initial price guidance of 4.7 percent area.
“The strong investor reception across all tranches underscores the republic’s unfettered access to the international capital markets,” de Leon said.
“Being the first and largest offshore Southeast Asia sovereign offering in 2022, the republic’s transaction has reopened the Asian bond markets for long-dated offerings and cements the republic’s position as the leading capital market participant in Asia,” she added.
Proceeds of the five-year and 10.5-year global bonds will be for the republic’s general purposes, including budgetary support, while proceeds from the 25-year global bonds will be for the republic’s general budget financing and to finance/refinance assets in line with the Sustainable Finance Framework.
“The successful transaction is a testament to the republic’s strong economic fundamentals and the confidence of the investor community in the country’s long term growth trajectory.
Despite volatility in the global markets, we have received overwhelming interest across all tranches, and especially on our first sovereign ESG bond issuance,” Mark Dennis Joven, finance undersecretary, said.
“The upsized issuance backed by a significantly oversized orderbook provides an overwhelming affirmation to the administration’s continued prudent fiscal and economic management amidst the pandemic,” he added.
Meanwhile, locally, the BTr has decided to partially award the reissued seven-year bonds during yesterday’s auction.
The auction attracted tenders of P40.6 billion, marginally higher than the P35 billion offer.
The BTr decided to partially award P15.7 billion while rejecting the rest.
“Market remains defensive with (Federal Reserve Chair Jerome) Powell turning aggressive as he indicated 50 bps rate hikes in next FOMC (Federal Open Market Committee) meetings is in table,” de Leon said.
“Meanwhile, higher inflation is seen this month with still elevated oil and commodities prices,” she added. – Angela Celis
