DOF highlight successful offshore issuances in 2018

MANILA, Philippines — The Department of Finance (DOF) has cited the government’s success in floating securities in foreign markets last year, which reflected the strong confidence of the international business community in the Philippine economy.

 In a statement, Finance Secretary Carlos Dominguez said the tight spreads fetched by the Philippines’ offshore bond issuances in 2018 illustrated investors’ confidence in the Duterte administration’s ability to soundly manage the country’s fiscal program.

 Dominguez cited the $2 billion 10-year global bonds issued by the Bureau of the Treasury in January last year which received a tight spread of 37.8 basis points over the US Treasuries.

He also noted the 1.46 billion renminbi three-year Panda bonds floated last March which fetched a spread of only 35 basis points over the benchmark.

 When the Philippines returned to the yen-denominated Samurai bond market last August after an eight-year hiatus, its multi-tranche ¥154.2 billion ($1.39 billion) transaction, yielded a weighted average spread of 34.7 basis points above benchmark, Dominguez said.

 With the positive and overwhelming response to the Philippines’ Panda and Samurai bond issuances, Dominguez said the government is likely to return to these markets every 12 to 18 months to establish a regular presence.

 “We told bankers that our policy now is not to be absent in any major market for long periods. For the Samurai, we are going to come back within 12 to 18 months from August. In China, we will come back to the market again within 12 to 18 months from last March,” Dominguez said.

 Dominguez said the BTr is also exploring other countries to help diversify the government’s borrowing portfolio as it rolls out more of its Build Build Build infrastructure projects.

 The Philippines set a record in the Panda bond market as almost 90 percent of the issuance was cornered by offshore or overseas buyers. Healthy demand pushed the coupon rate to five percent.

 Of the five sovereign Panda bond, only South Korea was priced at a tighter spread over benchmark, according to an International Financing Review (IFR) Asia report.

 The Philippines’ offering was 6.3 times covered with 9.2 billion renminbi in total tenders, the “biggest book and largest oversubscription of any sovereign Panda to date,” IFR Asia added.

 Meanwhile, the Philippine government also successfully sold ¥154.2 billion ($1.39 billion) worth of Samurai bonds with maturities spanning three, five and 10 years. The DOF said this was the largest Samurai bond transaction in Asia.

 The securities were awarded at coupon rates of 0.38 percent, 0.54 percent and 0.99 percent, respectively.

 Overall, the transaction yielded a weighted average spread of 34.7 basis points above benchmark, tighter than Indonesia and Mexico.