Sale of bonds “the bomb” raises 3 billion dollars

The Treasury Bureau (BTr) announced Tuesday that the Marcos government has raised a total of $3 billion in its second foray into the global bond market.

The Treasury Department said in a statement that the offering of at least $500 million in dollar-denominated notes with maturities of 5.5, 10.5 and 25 years had received “an impressive reception and tight pricing”.

Rosalia De Leon, National Treasurer, said it reaffirmed the Philippine Credit’s “distinguishment as a favored proposition even in times of uncertainty in the market landscape,” despite “teases from other big name holders.”

“It is a reward for our deft navigation of the pandemic crisis and a drive to become a beacon of growth in a period of diminishing global prospects,” she added.

The new 5.5 and 10.5-year notes are priced at 105 basis points and 145 basis points above US Treasury notes at coupon rates of 4.625 and 5.00 percent respectively.

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Pricing for both tranches was 50 basis points higher than initial guidance at T+155 basis points and T+105 basis points.

Meanwhile, the 25-year sustainability bond is priced at 5.50 percent par, 45 basis points below initial price guidance of 5.95 percent.

Finance Minister Benjamin Diokno said the “strong demand” for the country’s first international bond offering this year “represents a strong vote of confidence by international investors.”

“It is a testament to the sound economic fundamentals of the republic and the resilience of our economy in the face of volatile global financial markets,” he added.

“We are pleased to see international investors’ recognition of the Philippines’ strong economic recovery, sound fiscal policies and sensible social and economic agenda to promote sustainable and inclusive economic growth,” Diokno continued.

The 5.5-year notes will mature on July 17, 2028, the 10.5-year notes on July 17, 2033 and the 25-year sustainability notes on January 17, 2048.

Undersecretary of the Treasury Marc-Denis Goffin also said: “As an issuer seasoned in the international bond markets, Republic has once again received staggering interest across all segments of the supply.”

“The continued participation of high-quality global investors has been encouraging as it demonstrates strong confidence in the Republic’s long-term growth trajectory and sustainability commitments,” he added.

The government intends to use the proceeds from the sale of the 5.5- and 10.5-year bonds for general purposes, including budget support.

The 25-year bond – the fourth offering from ESG (Environmental, Social and Governance) in the Philippines – will be used to fund or refinance assets under the government’s sustainable financing framework.

The deal, which is expected to be settled on January 17, 2023, is the second time the Marcos government has tapped the global debt market after issuing a three-tranche bond worth $2 billion in October 2022.

Two more global offerings were made earlier that year by the outgoing Duterte administration: the 70.1 billion yen four-slide samurai show in April and the $2.25 billion three-slide show in March.

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