Gov’t raises $1.39B from yen debt sale
THE PHILIPPINES raised a total of ¥154.2 billion, or about $1.39 billion, as it returned to the “samurai” bond market after eight years, the Department of Finance (DoF) said in a statement on Wednesday.
The department said the government raised ¥107.2 billion in three-year papers with a 0.38% coupon, ¥6.2 billion in five-year debt that fetched 0.54% and ¥40.8 billion in 10-year notes that fetched 0.99%.
“Overall, the transaction yielded a weighted average spread of 34.7 bps above benchmark. Compared to our peers, the Republic priced tighter and issued more than Indonesia (¥100 billion) and higher-rated Mexico (¥135 billion),” Finance Secretary Carlos G. Dominguez III told reporters in a mobile phone message.
He said that the dollar equivalent of the transaction size is $1.39 billion, slightly more than the $1 billion initially planned.
National Treasurer Rosalia V. De Leon said in a mobile phone message that the sale involved “all new money.”
“The Republic has a track record of very tight pricing in US Dollar markets and we will be uncompromising in measuring against that benchmark in approaching new markets,” Ms. De Leon said in a DoF statement.
“Pricing on today’s offering is very compelling and we were able to print the maximum deal size we were seeking.”
‘DEEPENING CONFIDENCE’
The same statement quoted Mr. Dominguez as saying: “This successful return to the ‘samurai’ bond market is the latest proof of the deepening investor confidence in the Philippine economy under the Duterte presidency.”
“The government’s disciplined fiscal position, along with game-changing reforms starting with the new legislation — the Tax Reform for Acceleration and Inclusion Law — that has modernized and simplified Philippine taxation, have created enough room for our current policy of aggressive investments not only in public infrastructure but in human capital formation as well,” he added.
“Such priority programs are meant to sustain the country’s momentum as one of Asia’s fastest-growing economies, further improve its global competitiveness and bring lasting social
benefits to all Filipinos in keeping with President (Rodrigo R.) Duterte’s vision for high growth and financial inclusion,” said Mr. Dominguez.
The sale of yen-denominated bonds followed the Philippine economic briefing in Tokyo conducted by the government’s economic managers and other cabinet members in June, attended by about 500 investors.
The DoF said that Daiwa Securities Company Ltd., Mitsubishi UFJ Morgan Stanley Securities Co. Ltd., Mizuho Securities Co. Ltd., Nomura Securities Co. Ltd. and SMBC Nikko Securities, Inc. were the joint lead managers and book runners for the bond sale.
The bonds were rated investment grade at “Baa2” by Moody’s Investor Service, “BBB” by S&P Global Ratings, and “BBB+” by Japan Credit Rating Agency, Ltd.
“Today’s offering was well received by a good mix of institutional and regional investors — most of whom are new to Philippine credit. These included [asset managers, life insurers, trust banks and specialist banks, regional accounts including shinkin banks, non-Japanese accounts and corporates],” DoF said in its statement.
The Philippines last went to the “samurai” bond market in 2010, raising ¥100 billion in 10year notes that fetched a 2.32% coupon.
“Today’s offering marks the return of the Republic to the Samurai market after an eightyear break, and the first time in almost 20 years that it has issued ‘samurai’ bonds on a stand-alone basis,” the DoF said.
“This year has been a trailblazing year for the Republic in the international capital markets. In March we issued our debut ‘panda’ bonds to tremendous investor endorsement. And with today’s ‘samurai’ offering, we continue to expand and diversify our market access,” Ms. De Leon said.
‘INCREASING INTEREST’
Mr. Dominguez meanwhile said that the Philippines’ recent successful exposure in the capital markets in Japan and China “underscores the international business community’s increasing interest in investing in the Philippine growth story.”
The government sold $230 million worth of renminbidenominated “panda” debt in March with a five percent coupon, reflecting a tight 35 basis point spread above the benchmark rate.
It also raised $2 billion in its dollar global bond sale in January, with half consisting of new money and the other $1 billion in a debt swap for liability management.
The DoF has said that was looking the possibility of another global bond sale some time this semester.
The government plans to borrow P888.23 billion this year.
It has increased the share of foreign borrowings for this year to a 65-35 borrowing mix in favor of local sources, from a 74-26 ratio planned earlier and 80-20 programmed for 2017, in a bid to diversify its financing portfolio. —