MANILA – The Philippine government successfully issued USD2.35 billion worth of 10- and 25-year US dollar denominated bonds Monday, which authorities dubbed as a “big success” despite investors’ anxieties because of the coronavirus disease 2019 (Covid-19) pandemic.
In a statement, the Department of Finance (DOF) said the 10-year paper was priced +180 basis points higher than US Treasury spreads, better than the initial guidance of +220 basis points.
The 25-year paper was priced at 2.95 percent, 42.5 basis points lower than the 3.375-percent pricing guidance.
The transaction, which is the second for this year for the government after the EUR 1.2-billion double tranche global bond last January, is expected to be settled on May 5, 2020, it said.
National Treasurer Rosalia de Leon said the government was able to get its record-low coupon for both tenors.
“This makes the Philippines, at least for the time being, a diamond in the sovereign issuance space for we were able to convert immense pressure into an opportunity to dazzle in brilliant shine,” she said.
Proceeds of the bond issuance will be used for general budget support.
The government tapped Citigroup, Credit Suisse, Goldman Sachs (Asia) L.L.C, Morgan Stanley, Standard Chartered Bank, and UBS as Joint Bookrunners for this transaction.
Finance Secretary Carlos Dominguez III attributed the strong demand for the debt paper to “resiliency of investor interest in the Philippine economy despite the global economic fallout from the Covid-19 pandemic.”
He said “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.”
“The success of this bond float despite the Covid-induced volatility is also reflective of the global recognition of, and support for, the Duterte administration's four-pillar strategy to mitigate the impact of the global health crisis,” he said.
He is referring to the government’s PHP1.45 trillion worth support program identified to help sectors affected by the pandemic and the government’s post-Covid-19 economic recovery program.
The government, under its borrowing program for this year, also plans to issue yen-denominated Samurai bond and renminbi-denominated Panda bond.
De Leon said they continue to monitor these markets.
“(We) will have to see market developments and assess funding costs vs. other markets,” she said.
Asked whether the proceeds of foreign borrowings to date as well as the savings, the funds realigned from this year’s national budget, and the loans extended by the Asian Development Bank (ADB) and the World Bank (WB) are enough to fund the government’s Covid-19 response, de Leon said “financing for (the) four pillars can be mobilized.” (PNA)
