Phl raises $2.35 B from global bonds
The Philippines successfully sold $2.35 billion worth of 10-year and 25-year global bonds, priced at the lowest coupon rate ever achieved for these debt papers despite market volatility caused by the coronavirus disease 2019 or COVID-19 pandemic, the Bureau of the Treasury (BTr) reported yesterday.
According to the BTr, the government was able to raise $1 billion from the issuance of 10-year global bonds which fetched a coupon rate of 2.457 percent. This was 40 basis points tighter than the initial price guidance for the securities, which was 220 basis points above benchmark.
Another $1.35 billion was raised from the sale of 25-year global bonds, priced at 2.95 percent which was 42.5 basis points tighter than the initial pricing guidance of 3.375 percent.
“The transaction was able to achieve the Philippines’ lowest ever coupon for a 10and 25-year benchmark issuance amidst no less than an environment gripped with pandemic fear. 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,” National Treasurer
Rosalia de Leon said in a statement.
According to the BTr, the issuance of the global bonds was announced on April 27, with the Philippines “capitalizing on a short favorable market window amid broader volatility” arising from the COVID-19 pandemic.
“This opportunistic transaction was launched following a constructive week in Asia-Pacific credit markets and illustrates the country’s ability to navigate a challenging global environment and respond efficiently to capture conducive market conditions,” the BTr said.
Finance Secretary Carlos Dominguez said the success of the issuance reflects the international market’s support for the Philippine economy and its four-pillar socioeconomic strategy against COVID-19.
“The strong demand for this bond issue demonstrates the resiliency of investor interest in the Philippine economy despite the global economic fallout from the COVID-19 pandemic. 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,” Dominguez said.
“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.
The last time the Philippine government issued dollar bonds was in January 2019. Back then, the country was able to raise $1.5 billion from the sale of 10-year securities.
This recent issuance also marks the Philippines’ successful return to the international capital market for the second time this year, following the offering of 1.2 billion euros worth of three-year and nineyear global bonds in January.
Earlier, the Department of Finance (DOF) said the country’s fiscal deficit is estimated to widen to as much as 5.3 percent of gross domestic product (GDP) amid the expected drop in revenues due to the pandemic.
Dominguez said the government is prepared to increase its borrowings to plug this shortfall and sustain measures in response to COVID-19.