Government plans $1-billion samurai bond issue in August

MANILA, Philippines — The government is eyeing to issue up to $1 billion worth of yen-denominated bonds by mid-August, according to the Bureau of the Treasury.

In an interview, National Treasurer Rosalia de Leon said the government is gearing up for a possible return to the Japanese onshore market before mid-August.

“We are looking around sometime late July or early August, anywhere before the Ghost Month or Obon. I think that starts around mid-August, I think Aug. 8,” De Leon said in an interview.

According to De Leon, the BTr has already submitted the requirements to the proper authorities in Japan for the registration of its planned issuance.

Afterwards, De Leon said the government would conduct market sounding activities, to determine whether it would push through with the fund raising activity or not.

“Based on the market sounding, if the price is something acceptable to us, then we will proceed,” De Leon said.

However, she said the government has yet to finalize the tenors of the debt papers to be floated. De Leon maintained that the Treasury is looking into three tenor buckets, possibly ranging from three, five, seven or 10 years.

She said the volume of the issuance may reach up to $1 billion, at most, lower than the initial proposed size of $1.5 billion.

Meanwhile, short-term securities during yesterday’s auction fetched lower rates across-the-board, prompting the BTr’s auction committee to fully award the P15 billion issuance.

The average rate for the 91-day securities plunged by 50.2 basis points to 3.883 percent from the 4.385 percent recorded in the previous auction.

Total tenders reached P10.37 billion, more than 2.5 times higher than the P4 billion offer size.

Rates for the six month debt papers averaged 4.238 percent, 48.5 basis points down from 4.723 percent last June 25.

The P5 billion offering was almost four times oversubscribed, with total bids amounting to P19.15 billion.

Lastly, the 364-day debt notes fetched an average rate of 4.736 percent, 25 basis points lower than the June 25 level of 4.986 percent.

Total tenders amounted to P21.01 billion, about 3.5 times higher than the P6 billion offer volume.

According to De Leon, yesterday’s auction attracted overwhelming demand from investors due to the series of reserve requirement cuts implemented by the Bangko Sentral ng Pilipinas.

This was coupled with the limited supply in debt papers, as the BTr cut the volume of securities to be floated this third quarter.

“We have downsized our T-bills issuance so the demand is higher but supply is lower,” she said. “We also have a maturity of P19 billion this week so that also adds to the supply.”