Philippine plans $1 billion euro bond issuance

MANILA, Philippines — The Philippines may issue about $1 billion worth of euro-denominated securities in the offshore capital market, according to the Bureau of the Treasury (BTr).

In an interview, National Deputy Treasurer Erwin Sta. Ana said the government is planning to issue three-year and nine-year euro-bonds, with the initial volume set at a benchmark size equivalent to $500 million for each tenor.

“We’re looking at a benchmark size per tenor,” Sta. Ana said, noting that benchmark size for international capital market transactions is usually set at $500 million.

However, the BTr official said that the final size of the bond float would still depend on the demand from the market.

“The final size will have to be dependent on the orders,” he said. “We can also upsize if there’s ample demand.”

The Treasury has started its investor calls for the proposed fund raising activity.

Sta. Ana said the government has received positive results from market sounding activities, with investors from Europe and Asia, alike, expressing interest for the Philippine-issued papers.

“We had successful calls. Select investors and updates from the banks indicate a highly successful initial feedback from investors, not only in Europe, but also in Asia,” he said.

He said the Treasury was set to meet yesterday to decide whether to push through with the issuance or not.

The Philippines last tapped the European debt market in May last year, 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.

In addition to the euro bond offering, Sta. Ana said the Treasury is also looking for the right timing for the issuance of dollar denominated global bonds.

“We can do some sort of back-to-back (issuance), or just do a wait-and-see and monitor the US market some

more. There have been lots of issuances in that space so we’ll see from a supply perspective whether it’s time to go,” he said.

He also reiterated that the government is eyeing to tap the Chinese and Japanese debt markets this year.

While the timing has not been identified yet, Sta. Ana said these four fund raising activities could all fall within the first half.

“That’s a possibility,” he said.

The deputy treasurer said the Samurai-bond issuance, in particular, should be ideally done before the Tokyo Olympics in July.

In the domestic market, Sta. Ana said the Treasury is also looking to issue retail Treasury bonds “as early as possible.”