Philip­pines pays record low yield in $2b bond sale

The Pak Banker - - BUSINESS -

The Philip­pines raised $2 bil­lion in a sale of 25-year bonds to re­pay ma­tur­ing debt and re­tire some other notes to im­prove the fis­cal out­look be­fore a lead­er­ship change.

The dol­lar- de­nom­i­nated se­cu­ri­ties due March 2041 were priced to yield 3.70 per­cent, the low­est ever for a Philip­pine global bond, the govern­ment said in a state­ment. The rate is less than the ini­tially in­di­cated 4 per­cent and eclipses last year's un­prece­dented 3.95 per­cent yield for 25-year for­eign debt.

Filipinos head to the polls in May to choose a suc­ces­sor to Pres­i­dent Benigno Aquino, who is pro­hib­ited from run­ning for an­other six-year term. There is no clear front-run­ner to re­place the in­cum­bent, who has shrunk the bud­get deficit and tack­led cor­rup­tion, while boost­ing growth to the fastest pace since the 1970s. Political risk is weigh­ing on the peso, Alas­tair Pin­der, an Asian for­eign-ex­change strate­gist at HSBC Hold­ings Plc in Hong Kong, wrote in a re­search note on Mon­day.

"We have been closely mon­i­tor­ing mar­ket con­di­tions to en­sure we can nav­i­gate against a chal­leng­ing and volatile en­vi­ron­ment," Trea­surer Roberto Tan said in the state­ment. "The strong sup­port that we re­ceived from our in­vestors in this trans­ac­tion is a sign of con­fi­dence on the re­forms and strate­gies that the re­pub­lic has in­sti­tu­tion­al­ized."

There were $8 bil­lion of bids for the bonds, 51 per­cent of which came from the U.S., 32 per­cent from Asia and 17 per­cent from Europe, ac­cord­ing to the state­ment. Most of the is­suance will be used for an of­fer for in­vestors hold­ing debt due from 2016 to 2037 to switch to the new 25-year notes. The govern­ment ac­cepted $1.5 bil­lion of sub­mis­sions, higher than the $1.25 bil­lion it had said it was tar­get­ing.

"By lever­ag­ing th­ese op­por­tu­ni­ties to re­duce high-coupon debt and to ex­tend the ma­tu­rity of our debt port­fo­lio, the coun­try achieves valu­able sav­ings that we can use to tar­get broad­based and in­clu­sive growth and de­vel­op­ment," Fi­nance Sec­re­tary Ce­sar Purisima said in the state­ment.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.