Philippines raises $1.39 billion from samurai bonds

MANILA, Philippines — The government yesterday successfully sold ¥154.2 billion ($1.39 billion) worth of Japanese samurai bonds in three different tenors, according to the Department of Finance (DOF).

The bulk or ¥107.2 billion of the amount came in the form of three-year bonds, sold at a coupon rate of 0.38 percent. This was 25 basis points higher than the benchmark rate for the same securities.

Another ¥6.2 billion in five-year yen-denominated debt papers was also awarded at a coupon rate of 0.54 percent, 35 basis points above the benchmark rate.

The government also sold a 10-year tranche amounting to ¥40.8 billion at 0.99 percent, with a 60-basis points spread against benchmark.

Overall, the DOF said the transaction yielded a weighted average spread of 34.7 basis points above the benchmark rate. The government also issued a higher volume at a tighter pricing than Indonesia (¥100 billion) and Mexico (¥135 billion).

The DOF said the offering was participated by a good mix of institutional investors—including asset managers, life insurers, trust banks and specialist banks—and regional accounts—including shinkin banks, non-Japanese accounts and corporates.

The Bureau of the Treasury (BTr) will settle and issue the debt papers to investors on Aug. 15, a week after the price-setting auction.

According to the DOF, the offering marked the government’s successful return to the samurai market after an eight-year break. This was also the first time after almost 20 years that the government has issued samurai bonds on a standalone basis.

“This successful return to the samurai bond market is the latest proof of the deepening investor confidence in the Philippine economy under the Duterte presidency,” Finance Secretary Carlos Dominguez said.

“The government’s disciplined fiscal position, along with game-changing reforms starting with the new legislation—the Tax Reform for Acceleration and Inclusion (TRAIN) Law—that has modernized and simplified Philippine taxation, have created enough room for our current policy of aggressive investments not only in public infrastructure but in human capital formation as well,” Dominguez said.

National Treasurer Rosalia de Leon said this also counts as a back-to-back success for the Philippine government in foreign debt markets this year.

“This year has been a trailblazing year for the Philippines in the international capital markets. In March, we issued our debut panda bond to tremendous investor endorsement. And with today’s samurai offering, we continue to expand and diversify our market access,” De Leon said.