Philippines returns to international dollar bond market

MANILA, Philippines — The Philippines has returned to the international bond market via a dual-tranche US dollar-denominated bond offering, seeking financial support for the state’s budgetary needs.

This marked the first offshore debt offering under the Marcos administration this year.

In a report from the International Financing Review, a capital markets publication, the offering consists of dollar bonds with a tenor of 10 years as well as a 25-year sustainability tranche.

The initial price guidance for the 10-year tenor is set around the level of Treasuries plus 120 basis points. The 25-year sustainability bond is set around 6.05 percent.

The proceeds of the bond issuance will be used for general budget financing and financing or refinancing assets in line with the country’s sustainable finance framework.

Bank of America, Citigroup Inc., HSBC, JP Morgan, Morgan Stanley, Standard Chartered and UBS have been assigned as joint bookrunners.

Moody’s Investors Service gave the notes a senior unsecured rating of Baa2, which mirrors the Philippine government’s issuer rating.

S&P Global Ratings assigned a BBB+ long-term foreign currency rating to the US dollar senior unsecured notes to be issued by the Philippines, while Fitch Ratings gave it a BBB rating.

The 10-year notes will mature on May 14, 2034, while the 25-year sustainability bonds on May 14, 2049.

The government is targeting to borrow P2.57 trillion this year, with 75 percent of the borrowings sourced domestically and the remaining 25 percent from offshore investors.

Last year, the Marcos administration borrowed $5.26 billion from the global debt market, higher by five percent from the programmed $5 billion.

Broken down, the initial $3 billion was secured via a triple-tranche global bond in January 2023.

Another $1.26 billion from the first retail dollar bond issuance was also secured in October 2023.

The remaining $1 billion was borrowed from the maiden issuance of sukuk bonds as the government moved to diversify the country’s investor base.