The Philippine Star

Phl raises $2.75 B from global bonds

The Philippine­s successful­ly raised $2.75 billion from its dual-tranche offering of dollar-denominate­d bonds, securing the lowest coupon rate ever achieved by the government in the debt market, top government officials said yesterday.


In a text message, National Treasurer Rosalia de Leon said the government sold $1.25 billion worth of 10.5-year bonds and $1.5 billion worth of 25-year securities during its latest global bonds offering.

Finance Secretary Carlos Dominguez said the success of the offering shows “the internatio­nal investor community’s recognitio­n of the Philippine economy’s strong fundamenta­ls despite the global economic downturn caused by the COVID-19 pandemic.”

“We believe this result indicated that internatio­nal investors are aware of, and appreciate, the Duterte administra­tion’s resolve to rebuild the domestic economy and its initial headway in steering it back to its pre-COVID growth trajectory,”he said.

Dominguez said the 10.5-year global bonds fetched a coupon rate of 1.648 percent, 70 basis points above the US Treasury. This spread is tighter than the initial pricing guidance of 100 basis points above the benchmark rate.

“Prudent fiscal management and bold economic reforms that President Duterte put in place since he assumed office in 2016 are paying off. These initiative­s have given the government headroom to spend on COVID-19 response even as it sustains its aggressive spending on infrastruc­ture and other priority programs to revive the economy amid the global slowdown,” Dominguez said.

The 25-year tranche, meanwhile, was priced at 2.65 percent or 35 basis points tighter than the initial pricing guidance of around three percent.

Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the deal set the record for the lowest coupon rate the Philippine­s has achieved in the dollar bond market, as both rates were lower than the previous record of 2.46 percent and 2.95 percent fetched by the 10-year and 25-year global bonds issued in April.

The transactio­n is expected to be settled on Dec. 10. Proceeds of the issuance will be used for the government’s general purposes, including budgetary support.

This is the country’s third foray into the internatio­nal market this year, following the $2.35 billion global bond offering in May and the 1.2 billion euro global bond sale in January.

According to the DOF, the transactio­n was announced on Dec. 2 as the country sought to take advantage of the “constructi­ve market backdrop post-US elections.”

“Positive news on the COVID-19 vaccine trials over the past couple of weeks have created strong inflows in Asia-Pacific credit markets, which illustrate­s the country’s ability to capitalize on favorable market dynamics,” it said.

De Leon said the deal manifests the government’s ability to identify and capture favorable market windows even during uncertain times.

Finance Undersecre­tary Mark Dennis Joven shared the same sentiment, saying the successful transactio­n reflects the confidence of the market in the economy, sound credit profile and growth trajectory.

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