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Duterte gov't braves volatility, raises $2.35 billion from dollar global bonds

Ian Nicolas Cigaral - Philstar.com
Duterte gov't braves volatility, raises $2.35 billion from dollar global bonds
In a statement, National Treasurer Rosalia de Leon said the government sold $1.35 billion in 25-year debt papers and another $1 billion notes maturing in 10 years.
Edd Gumban

MANILA, Philippines — The Duterte administration braved financial market volatility and raised $2.35 billion in funding from fresh issuance of US dollar-denominated global bonds, proceeds of which will be used to respond to the coronavirus outbreak.

In a statement on Tuesday, National Treasurer Rosalia de Leon said the government raised $1.35 billion from floating 25-year debt papers, while another $1 billion was collected from 10-year bonds.

Interest charged on the papers, gauged through a coupon rate, settled at 2.457% for 10-year bonds and 2.95% for 25-year securities. De Leon said they were “the lowest ever coupon” for the bonds, which were charged 40 basis points and 42.5 bps, respectively below the initial pricing set by the government.

Interest dropped because of strong demand. While the size of offering to investors was not disclosed, De Leon said the government received a total of $10.5 billion in tenders for both securities.

“The strong demand for this bond issue demonstrates the resiliency of investor interest in the Philippine economy despite the global economic fallout from COVID-19 pandemic,” Finance Secretary Carlos Dominguez III said in the same statement.

Actual funds from the bond offering are not expected to be remitted to the Bureau of the Treasury until May 5.

The bond issuance comes at a crucial time for the Philippines, which is scrambling to raise funds to finance social programs meant to offset the COVID-19 impact on livelihood and labor. 

Apart from the global bonds, the government has also been floating Treasury bonds and bills every week to source credit from local investors. For this month alone, data showed a total of P103 billion was raised from Treasury bills, and another P60 billion from Treasury bonds.

Multilateral organizations namely the World Bank and Asian Development Bank were also approached for loans totaling some $5.7 billion, some of which had not been credited to the government or disclosed publicly as negotiations remain underway.

The central bank also contributed P300 billion last month when it invested on Treasury securities. The borrowings are on top of some revenues pooled from state corporation dividends totaling P100.2 billion as of April 20, according to the President’s report to Congress.

In total, based on Philstar.com’s independent fund monitoring, sources of a total of P884.51 billion in cash had been determined, including proceeds from this global bond issuance, as of April 28.

“Such support from the investor community is a result of the continued strong macroeconomic fundamentals of the country brought about by the reform agenda of the Duterte administration,” Dominguez said.

GLOBAL BONDS NOVEL CORONA VIRUS WITH THE BUREAU OF THE TREASURY
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