Philippines raises $1.33 billion from euro bonds
Mary Grace Padin (The Philippine Star) - January 23, 2020 - 12:00am

The Philippines has raised 1.2 billion euros (approx. $1.33 billion) from the issuance of three-year and nine-year global bonds, marking the government’s successful return to the international capital market, according to the Bureau of the Treasury (BTr).

In a report to Finance Secretary Carlos Dominguez, National Treasurer Rosalia de Leon said the government has issued 600 million euros worth of three-year global debt papers, and another 600 million euro in nine-year securities, both of which were priced at tight spreads.

The three-year notes secured a coupon rate of zero percent, 40 basis points over benchmark.

 “We issued the three-year with a yield of 0.10 percent, allowing us to print at a zero percent coupon for a global bond, with a spread of 40 basis points over benchmark,” De Leon said in a text message shared by Dominguez to reporters.

This is likewise tighter than the initial price guidance for the securities, which had a spread of about 65 basis points above benchmark.

“The three-year bonds allowed the coutry to price its first zero coupon bond in the euro markets and even price its tightest coupon in history for a euro transaction,” De Leon said in a separate statement.

De Leon said nine-year bonds fetched a coupon rate of 0.70 percent, which is tighter than the 0.875 percent recorded during the government’s previous issuance of eight-year euro-denominated papers last year.

She said the bonds also have a spread of 70 basis points above benchmark, tighter than the initial price guidance of 95 basis points.

The notes will be settled on Feb. 3, 2020. 

 According to the treasurer, the fund raising activity was 3.58 times oversubscribed, with total book orders reaching 4.3 billion euros.

“The offering garnered significant demand from high quality accounts which allowed us to price a record low euro coupon for the country. The successful transaction allowed us to diversify our funding program and minimize our funding costs to support productive spending for infrastructure and social services,” De Leon said.

Dominguez, for his part, attributed this to the growing confidence of international investors in the country’s growth path.

 “The overwhelming response from the market for this landmark transaction underscores the international investor community’s deepening confidence in the Philippine economy amid the reforms put in place by the Duterte administration to sustain the country’s high and inclusive growth in the face of the current geopolitical headwinds,” he said.

This issuance is the country’s first transaction in the international capital market this year.

It also marks the government’s return to the European debt market after the previous issuance in May last year. That time, the country was able to raise 750 million euros from the issuance of eight-year global bonds, priced at a coupon rate of 0.875 percent or 70 basis points over benchmark.

Proceeds from the issuance will be used for general government purposes, including budgetary support. 

sUBS acted as sole global coordinator, joint lead manager, and joint bookrunner for the transaction. Citi, Credit Suisse, and Standard Chartered Bank also served as joint lead managers and joint bookrunners.


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