The Philippine government on Tuesday raised $2.35 billion from the sale of 10-year and 25-year global bonds amid strong demand.
The Finance Department said in a statement the new 10-year global bonds were priced at US Treasury spreads of T+180 basis points, after an initial pricing guidance of T+220 bps area, while the 25-year tranche was priced at 2.950 percent, which was 42.5 bps tighter than the initial pricing guidance of 3.375 percent area.
National Treasurer Rosalia de Leon said the transaction registered the country’s lowest ever coupon for a 10- and 25-year benchmark issuance amid 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,” de Leon said.
The global bonds were rated investment grade or “Baa2” by Moody’s Investors Service, “BBB+” by Standard & Poor’s and “BBB” by Fitch Ratings. The transaction is expected to settle on May 5, 2020.
Finance Secretary Carlos Dominguez III said the strong demand for the bond issuance demonstrated 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.
He said the four-pillar strategy included providing immediate financial support to millions of the most vulnerable families as well as employees of small businesses; mobilizing resources to support the frontline health workers and increase testing capacity; providing liquidity and support to the economy; and putting in place an economic recovery plan that is responsive to the needs of consumers and businesses to create jobs and sustain growth.
Finance Undersecretary Mark Dennis Joven said the government was expecting another successful US dollar-denominated bond issuance despite the challenges the global economy was facing.
“With the sovereign’s credibility in the international market, coupled with its solid economic fundamentals and long-term growth prospects, this successful issuance has only been a matter of timing,” Joven said.
Proceeds of the issuance will be for the government’s general purposes, including budgetary support.
Capitalizing on a short favorable market window amid broader volatility arising from concerns over the coronavirus disease 2019 crisis, the government announced the issuance on April 27.
The opportunistic transaction was launched following a constructive week in Asia-Pacific credit markets and illustrates the Republic’s ability to navigate a challenging global environment and respond efficiently to capture conducive market conditions.
It followed a EUR 1.2-billion double-tranche global bond offering by the country in January this year and $1.5 billion and EUR750 million global bond offerings in 2019.
Citigroup, Credit Suisse, Goldman Sachs (Asia) L.L.C, Morgan Stanley, Standard Chartered Bank and UBS acted as joint bookrunners for the transaction.
Global debt watchers S&P, Moody’s and Fitch assigned investment grade ratings to the bond issuance.
S&P said the notes “represent direct, general, unconditional, unsecured, and unsubordinated obligations of the sovereign, and rank equally with the sovereign’s other unsecured and unsubordinated debt obligations.”