The Philippines successfully sold Friday $2 billion worth of 10-year US dollar bonds due 2028 in the international market, garnering strong support from investors.
The Finance Department said in a statement the transaction marked the first time the Philippines issued a 10-year US dollar bond since 2014.
“The strong support that this 10-year global bond float has received in the international capital markets is a testament to the deepening investor confidence in the country’s newfound status under the Duterte presidency as one of the world’s fastest-growing economies,” Finance Secretary Carlos Dominguez said.
The new bonds were priced at par with a coupon of three percent against the initial guidance of 3.3 percent.
The bonds received an investment grade rating from Moody’s Investors Service, Fitch Ratings and Standard & Poor’s.
“The capital raised from this bond float plus the additional revenue take from the newly-implemented TRAIN Law will help bankroll President Rodrigo Duterte’s ‘Build, Build, Build’ program to modernize the country’s infrastructure, sharpen its global competitiveness and sustain rapid—and inclusive—growth as well as financial inclusion for all Filipinos,” Dominguez said.
Citigroup and Standard Chartered Bank acted as dealer managers for the Switch exercise and acted as joint global coordinators for the New Bond issuance.
Citigroup, Credit Suisse, Deutsche Bank, Morgan Stanley, Standard Chartered Bank, and UBS acted as joint deal managers and book runners for the issuance of the New Bonds.
“The settlement of the new bond offering is expected to occur on Feb. 1, 2018,” the Treasury earlier said.
Proceeds are expected to help cover the government’s budget deficit which is expected to account for 3 percent of the gross domestic product this year.
Moody’s Investors Service assigned a provisional (P)Baa2 senior unsecured rating to the bond offering. “The rating mirrors the government of the Philippines’ issuer rating of Baa2 with a stable outlook,” the debt watcher said.
The government posted a budget deficit of P243.5 billion in the first 11 months of 2017, behind the P482.1-billion deficit target for the year.
The government set a record P3.77-trillion budget for 2018 which would help finance major infrastructure projects.
Moody’s said improved debt affordability would give the government fiscal space for higher infrastructure spending, which was expected to increase to more than 7 percent of GDP by 2022.