$2-B global bond sale a success — DOF

MANILA, Philippines — The Philippine government successfully sold $2 billion worth of new 10-year global bonds amid strong investor confidence from the international capital market, according to the Department of Finance (DOF).

In a statement, the DOF said the debt papers, maturing by 2028, fetched a coupon rate of three percent, tighter than the initial pricing guidance of 3.3 percent. This also represents a spread of 37.8 basis points over the US Treasury rate, it said.

Of the total issuance, the DOF said $750 million was allocated to raise fresh money.

Meanwhile, the remaining $1.25 billion was used for a one-day accelerated switch tender offer, which allowed holders of existing dollar-denominated bonds to swap the debt papers for new bonds or cash.

The settlement of the bond offering is set to occur on Feb. 1.

Finance Secretary Carlos Dominguez said the successful turnout of the global bond sale reflects the confidence of the international market to the economic path of the Philippines under the Duterte administration.

“The strong support that this 10-year global bond float has received in the international capital markets is a testament to the deepening investor confidence in the country’s newfound status under the Duterte presidency as one of the world’s fastest-growing economies,” Dominguez said.

According to Dominguez, the new money raised from the global bond sale, plus the additional revenue to be generated from the newly-implemented Tax Reform for Acceleration and Inclusion (TRAIN) Act would help bankroll the administration’s ambitious infrastructure program.

He said the liability management exercise is also in line with the Philippines’ goal of achieving significant cost savings through the reduction of overall interest expense.

Citigroup and Standard Chartered Bank acted as joint global coordinators for the bond issuance and as dealer managers for the switch exercise.

Citigroup, Credit Suisse, Deutsche Bank, Morgan Stanley, Standard Chartered Bank, and UBS also acted as joint deal managers and book runners for the issuance of the new bonds.

Earlier, Moody’s Investors Service, and S&P Global Ratings assigned investment grade ratings for the bond issuance.

Moody’s assigned a provisional (P)Baa2 senior unsecured rating, mirroring the Philippine government’s  issuer rating of Baa2 with a stable outlook.

S&P, for its part, assigned a BBB long-term foreign currency issue rating.

The last time the government issued global bonds was in 2017, when it raised $500 million in fresh money and swapped $1.5 million in debt papers.

For 2018, the Philippine government is programmed to borrow $3.456 billion or P176.26 billion from foreign lenders, corresponding 20 percent of the P889.51 debt ceiling set next year.