Philippines raised $2.5B from offshore dollar bond sale —Treasury

The Philippines has raised $2.35 billion or roughly P127.5 billion from the sale of dollar-denominated bonds in the international market, the Bureau of the Treasury said Tuesday.

“Yes, done —$2.35 billion in dual tranche,” National Treasurer Rosalia de Leon said in a text message.

The $2.35-billion dollar bonds sold offshore are broken down as $1.35 billion maturing in 25 years and $1 billion maturing in 10 years.

Proceeds of the issuance will be for the government’s general purposes, including budgetary support, according to the Treasury.

The 25-year dollar bonds have a coupon rate of 2.95% and the 10-year papers have a coupon rate of 2.457%.

The coupon rate for the 25-year global bonds was 42.5 basis points tighter than the initial pricing guidance of 3.375% area, while the 10-year papers were 40 basis points lower from its initial pricing.

“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,” de Leon said.

“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 said.

The transaction is expected to settle on May 5, 2020, the Treasury said in a separate statement.

The latest global bonds are expected to be rated Baa2 by Moody’s, BBB+ by Standard & Poor’s, and BBB by Fitch.

Capitalizing on a short favorable market window amidst broader volatility arising from concerns over the coronavirus disease 2019 (COVID-19) crisis, the Republic announced this issuance on Monday, April 27, 2020, the BTr said.

For his part, Finance Secretary Carlos Dominguez III said, “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 pandemic.”

“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,” Dominguez said. 

“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,” he said.

The Finance chief noted that the government’s four-pillar strategy includes providing immediate financial support to millions of the most vulnerable families as well as employees of small businesses; mobilizing resources to support our frontline health workers and increase our testing capacity; providing liquidity and support to the economy; and putting in place an economic recovery plan that is responsive to the needs of consumers and businesses to create jobs and sustain growth.

Citigroup, Credit Suisse, Goldman Sachs (Asia) L.L.C, Morgan Stanley, Standard Chartered Bank and UBS acted as joint bookrunners for the transaction. —KBK/KG, GMA News