THE Philippines has successfully returned to the international capital markets with its offering of $2.35 billion global bonds, which posted record-low coupon rates for the 10-year and 25-year issuances.
“The transaction was able to achieve the Republic’s lowest ever coupon for a 10- and 25-year benchmark issuance amidst no less than an environment gripped with pandemic fear,” Rosalia de Leon, national treasurer, said in a statement yesterday.
“This makes the Philippines, at least for the time being, a diamond in the sovereign issuance space for we were able to convert immense pressure into an opportunity to dazzle in brilliant shine,” she added.
The new 10-year global bonds were priced at US Treasury spreads of T+180 basis points (bps) after an initial pricing guidance of T+220 bps area, while the 25-year tranche was priced at 2.950 percent, which is 42.5 bps tighter than initial pricing guidance of 3.375 percent area.
The transaction is expected to settle on May 5, 2020.
“The strong demand for this bond issue demonstrates the resiliency of investor interest in the Philippine economy despite the global economic fallout from the COVID-19 (coronavirus disease 2019) pandemic,” Carlos Dominguez, Department of Finance secretary, said.
“Such support from the investor community is a result of the continued strong macroeconomic fundamentals of the country brought about by the reform agenda of the Duterte administration,” he added.
This deal follows a 1.2 billion euro double tranche global bond offering by the Republic in January this year, as well as $1.5 billion and 750 million euro global bond offerings in 2019.
“The success of this bond float despite the COVID-induced volatility is also reflective of the global recognition of, and support for, the Duterte administration’s four-pillar strategy to mitigate the impact of the global health crisis,” Dominguez said.
Proceeds of the issuance will be for the Republic’s general purposes, including budgetary support.
“We have been expecting another successful USD denominated bond issuance despite the challenges the global economy is currently facing,” Mark Dennis Joven, DOF undersecretary, said.
“With the Sovereign’s credibility in the international market, coupled with its solid economic fundamentals and long-term growth prospects, this successful issuance has only been a matter of timing,” he added.
Citigroup, Credit Suisse, Goldman Sachs (Asia) L.L.C, Morgan Stanley, Standard Chartered Bank and UBS acted as joint bookrunners for the transaction.
Meanwhile, the Bureau of the Treasury (BTr) decided to fully award the P30 billion offer for the reissued treasury bonds at yesterday’s auction, amid significant market demand
The domestic securities, with one year and nine months residual maturity, fetched an average rate of 3.052 percent.
The auction was met with robust market demand, attracting tenders of P109.5 billion, more than 3.5 times the P30 billion offer.
The BTr also opened its tap facility window, allowing it to raise another P15 billion.
“Auctions have been on full awards and are able to mobilize more from tap because of low rates and oversubscription,” de Leon said.
