Gov’t eyes up to $1 B from samurai bond issue

MANILA, Philippines — The government yesterday launched its samurai bond issuance with multiple tenors to raise up to $1 billion in fresh funds for the state’s coffers, the Bureau of the Treasury (BTr) announced.

In an interview, National Treasurer Rosalia de Leon said the Treasury has already started offering three, five, seven and 10-year yen-denominated securities to onshore Japanese investors.

“We are already in the market, given also the initial price guidance for the three, five, seven and 10 years. So the official marketing starts today,” De Leon told reporters.

De Leon said the Treasury has decided to increase the tenor buckets as investors expressed interest in seven-year debt papers during the soft sounding phase.

According to De Leon, the Philippines is eyeing to raise at least $750 million up to $1 billion worth of yen-denominated bonds from the fund raising activity, without specific allocation for each tenor.

“We are still looking at up to $750 million and if there would still be some room to adjust then we can go as high as $1 billion,” she said.

De Leon said the BTr is eyeing to close the deal before the Ghost Month celebrations or the Obon on Aug. 8.

“The marketing period can last, depending if we see a very strong book and we want to cut the offering. It’s like RTBs (retail treasury bonds). Otherwise, we can spill over until next week,” she said.

For now, De Leon said the results of the fund raising activity would depend on the Japanese market’s reception of the Bank of Japan’s move to hold policy rates steady.

 “We have to see the reaction of the investors to the BOJ policy setting,” she said.

The national government borrows from both local and foreign creditors to finance its budget deficit, which is capped at 3.2 percent of the gross domestic product (GDP) this year.

For 2019, the national government is expected to borrow P1.19 trillion, 20 percent higher than the 2018 program of P986 billion due to the higher fiscal deficit ceiling for this year.

Of the total borrowings for this year, P297.2 billion is projected to come from foreign lenders, while the remaining P891.7 billion would be sourced from domestic creditors.

Aside from the samurai market, the Treasury earlier this year also issued dollar denominated global bonds, panda bonds, and euro bonds.

Last January, the government raised $1.5 billion from the issuance of dollar-denominated global bonds, which fetched an all-in yield of 3.75 percent, 110 basis points higher than the US Treasury rates.

The Philippines also returned to the European debt market in early May, raising 750 million euros from the issuance of eight-year global bonds. The debt papers were priced at a coupon rate of 0.875 percent, 70 basis points over benchmark.