PHL NETS ₱ 122.4B FROM EURO BOND TRANSACTION
THE Philippine government borrowed 2.1 billion euros ($2.53 billion or about P122.4 billion) by selling its first-ever triple-tranche euro-denominated bonds.
The government raised 650 million euros each from four-year and 12-year notes while it raked in 800 million euros from its 20-year tranche.
This deal also marks the government’s largest euro bond transaction and the country’s second offshore bond sale this year following the 55 billion yen Samurai bonds it issued last month.
Proceeds of the euro bond issuance will be for the government’s general purposes, including budgetary support.
The Bureau of the Treasury said there was strong demand for the four-year, 12-year and 20-year global bonds which enabled the government to revise its price guidance twice across all three tranches. The order book peaked at around 6.5 billion euros.
The 20-year bond offering was also the country’s longest-ever tenor bucket for euro bond issuances and its largest individual euro bond tranche.
The four-year and 12-year euro bonds fetched a coupon rate of 0.25 percent and 1.2 percent, respectively. The four-year tranche was priced at 75 basis above benchmark while the 12-year tranche was priced at 105 basis points above benchmark.
The 20-year bonds were also priced at 135 basis points above benchmark and a coupon rate of 1.750 percent.
The transaction is expected to settle next Wednesday, April 28, 2021.
Dominguez: investor confidence
Finance Secretary carlos G. Dominguez iii said the Philippines’s successful return to the international capital market for the second time this year showed investor confidence in the country’s prospects for a strong recovery from the prolonged pandemic.
“investors apparently believe we have what it takes to ride out the covid-19 crisis on the strength of the fiscal discipline that has been maintained and the tax measures plus other reforms that have been carried out by the government since President Duterte assumed office five years ago,” Dominguez said.
Finance Undersecretary Mark Joven added the euro bond market has “proven to be an attractive and sustainable funding source for the Republic on top of our usual Peso, Dollar and Japanese Yen issuances.”
For her part, national Treasurer Rosalia V. de Leon said “the success of this euro deal, being already our fourth offering since the pandemic, serves as affirmation that we are on track to emerge from this crisis as a stronger and more resilient economy.”
The global bonds are expected to be rated Baa2 by Moody’s, BBB+ by Standard & Poor’s, and BBB by Fitch.
BNP Paribas, credit Suisse, Goldman Sachs, J.P. Morgan, nomura, and Standard chartered Bank acted as Joint Lead Managers and Joint Bookrunners for the transaction.
The country aims to borrow a total of P3.03 trillion this year, roughly the same amount it borrowed in 2020.
Bulk of the borrowings this year will be sourced locally at P2.58 trillion while P442.36 billion will be raised from foreign sources.