THE PHILIPPINES raised $3 billion (P146 billion) from the sale of US dollar-denominated global bonds in a dual-tranche offering, which will be used to fund the national budget, a Treasury official said.
National Treasurer Rosalia V. de Leon said the 25-year tranche raised $2.25 billion, while the 10.5-year tranche generated $750 million.
The 10.5-year bonds were priced at 60 basis points (bps) over the benchmark US Treasury yield, carrying a 1.95% coupon, while the 25-year debt papers fetched a coupon of 3.2%, the Bureau of the Treasury (BTr) said.
Ms. De Leon said the “heavy bias towards the 25-year offering” shows that the Philippines’ credit remains attractive for investors despite the impact of the coronavirus pandemic.
“Investors see our economic revival is imminent, strong, and long lasting,” she added.
The government will use the fresh funds to support the national budget amid the pandemic.
“This (global bonds) highlights the continuing confidence of the international investor community in the Philippines,” Finance Secretary Carlos G. Dominguez III said in a statement.
The Philippines will issue the bonds on July 6.
“Despite relatively volatile markets after the June FOMC (Federal Open Market Committee) meeting, the Republic was able to take advantage of the improving dynamics in both Treasury and credit markets and announce the transaction on Monday,” the BTr said.
The US Federal Reserve hinted earlier this month that it may need to start increasing its policy rates twice in 2023 as the US economy’s recovery picks up pace.
S&P Global Ratings assigned a “BBB+” long-term foreign currency rating to the issuance while Fitch Ratings gave a “BBB” rating with a stable outlook, similar to the sovereign rating the Philippines currently has.
Bank of China, Deutsche Bank, Goldman Sachs, Morgan Stanley, MUFG Securities, Standard Chartered Bank, and UBS served as the joint bookrunners for the transaction.
The issuance marked the third time the country tapped the international debt markets this year, following the $2.5 billion worth of euro-denominated notes it sold in April and the $500-million yen-denominated Samurai bonds issued in March.
The government is planning to raise a total of $7 billion (P340.5 billion) from the international debt market this year.
The BTr wants to borrow P3 trillion from local and foreign sources this year to fund its budget deficit seen to widen to 9.3% of gross domestic product.
Economic managers set an 85:15 borrowing mix for the year in favor of domestic sources to minimize risks from foreign exchange volatility and other external developments.