PHILIPPINE GOVERNMENT tapping the offshore credit market for the second time this year through US triple-tranche offering dollar global bonds amid improving global sentiment.
The Bureau of the Treasury (BTr) on Tuesday announced that it will offer five-and-a-half-year, 10- and 25-year US dollar bonds.
Initial price guidance was 85 basis points (bps) above US Treasuries for the five-and-a-half-year category, and 125 bps above US Treasuries for the 10-year bonds.
BTr said the 25-year offering will be a tap of its existing 5.75% 2051 US dollar bonds issued in January. The rates of these bonds are set at 6.1%.
“The National Government remains committed to promoting robust and inclusive economic growth. This transaction highlights our continued pursuit of prudent financial management and our broader development agenda. Against the backdrop of encouraging developments in global markets, we are confident that our policy direction will continue to be well received by the international investment community,” said Finance Secretary Frederick D. Go in a statement.
BTr said the transaction will be priced during the New York trading session on Tuesday, and settlement will take place on June 24.
The proceeds from the bonds will be used to fund the general budget, it added.
“The return of the republic to the international financial markets comes at the right time, between improving market sentiments and positive developments around the world. This transaction shows our smart and active approach to funding, which allows us to get funding in the right way while supporting the National Government’s programs and development goals,” said National Treasurer Sharon P. Almanza.
The government was able to time the release while yields were low, the trader said in a message, noting that they could raise $3 billion in cash.
“The 25-year 2051 series is actually running close to its coupon rate, so that means the government is issuing this at pre-war production levels,” the trader said.
Moody’s Ratings on Tuesday gave global bonds a Baa2 rating in line with the country’s sovereign rating.
“According to the terms and conditions available to us, the bonds to be issued under the shelf program will include direct, unconditional and non-subordinated obligations of the issuing Philippine government. The bonds will rank pari passu with all current and future unsecured foreign debt obligations,” the debt watcher said in the paper.
The bonds are also expected to be rated BBB+ by S&P Ratings and BBB by Fitch Ratings.
BNP Paribas, Citigroup, HSBC (B&D), JPMorgan, MUFG, and Standard Chartered Bank were approved as lead managers and bookrunners for the project.
Ms. Almanza previously said that they are looking to return to the foreign debt market during the second quarter to get the remaining 2.5 billion from the government’s foreign borrowing program.
In January, the government raised $2.75 billion in a triple-tranche dollar bond issue. It raised $500 million from 5.5-year bonds with a coupon rate of 4.25%, $1.5 billion from 10-year notes with a coupon rate of 5%, and $750 million from 25-year debt with a coupon rate of 5.75%. – Aaron Michael C. Sy
