The government has successfully returned to the international capital markets, its first under the Duterte administration, with its offering of $2 billion worth of 25-year Global Bonds, at a coupon rate of 3.7 percent.
The yield, after an initial pricing guidance of 3.95 percent, was on par with the Philippines’ 25-year bond offering in 2016.
The new issue of Global Bonds was in conjunction with a one-day Accelerated Switch Tender Offer for USD bonds maturing between 2019 and 2037. The tender offer exercise targeted existing bondholders to switch into the new Global Bonds.
Bonds with a total notional value of $3.56 billion were submitted for the switch tender offer and the Philippines accepted a market value of $1.5 billion from the submissions.
Proceeds of the issuance will be used to fund the tender offer and related expenses, while the remaining amounts will be used for general purposes, including budgetary support.
Order books for the new 25-year global bond offering were approximately $4.5 billion.
By geographical allocation, 33 percent came from Asia, 24 percent from the US and 43 percent from Europe.
“With this transaction, the Republic has extended its excellent track record in executing liability management transactions,” Finance Secretary Carlos Dominguez said.
“The tight pricing we achieved on the new 25-year bond offering, we believe, underscores the confidence of global investors in the Duterte administration,” Dominguez added.
Citigroup, Credit Suisse, Deutsche Bank, Standard Chartered Bank and UBS acted as joint global coordinators, dealer managers and bookrunners for the transaction.
“Amidst the volatility in global markets, we have managed to garner robust support from the fixed income investor community, a testament to the resilience of the Philippine economy as well as the strong faith that these investors have in the Duterte administration in executing and implementing reforms and strategies,” National Treasurer Roberto Tan said.
“Once again, the liability management exercise has allowed the Republic to achieve significant cost savings that can be channeled towards productive areas that will benefit the country,” Tan added.
20 January 2017
