The Philippines has successfully raised $2 billion from its dual-tranche global bond offering, its first foreign denominated issuance for the year.
In a statement yesterday, the Department of Finance (DOF) said the Republic took advantage of improving market sentiment following a softer-than-expected US labor market print which alleviated concerns over the Fed rate path.
“The success of the offering illustrated the Republic’s ability to navigate an uncertain policy rate environment and respond efficiently to capture conducive market conditions,” the DOF said.
According to the agency, the transaction attracted significant demand and strong orderbook momentum carried across markets, with interest from a diverse pool of global accounts, showcasing investors’ confidence in the country’s credit profile and long-term outlook.
The new 10-year tranche was priced at 80 basis points (bps) over Treasuries area, reflecting a tightening of 40 bps from initial price guidance.
Meanwhile, the new 25-year sustainability bond was priced at 5.6 percent at par, 45 bps tighter than the initial price guidance.
The transaction is expected to settle on May 14, 2024.
“We secured funding from the market at very cheap rates, which allowed us to save on borrowing costs. The 10-year spread has been the tightest among all our similar issuances since 2022, while the 25-year sustainability tranche achieved the second-best rate in the government’s history,” DOF Secretary Ralph Recto said.
“The tight pricing, especially compared to higher-rated peers, serves as an indication of the country’s exceptional performance beyond its current credit rating and makes a good case for a rating upgrade,” he added.
Proceeds from the sale of the 10-year Global Bond will be used for general budget financing while proceeds from the sale of the 25-year Global Bond are also intended for general budget financing as well as refinancing programs and expenditures in line with the Republic’s Sustainable Finance Framework.
