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Local investors swamp $500M bond issue

Gov’t securities maturing in 2023 fetch yield of 2.75%


The government on Wednesday, Nov. 28, 2012, bid bonds dominated in dollars from the local market given the excess foreign exchange liquidity of banks in the country. National Treasurer Rosalia de Leon said borrowing dollars from the local market was less expensive for the government. AP

High liquidity and optimism on the economy pushed investors to swamp the auction Wednesday for the government’s $500-million onshore dollar bond issue.

Bids for the bonds, which were denominated in dollars but sold in the local market, reached $1.74 billion. The Bureau of the Treasury, however, stuck to the borrowing program and accepted only $500 million.

The bonds, which will mature in 2023, fetched a coupon rate of 2.75 percent. The Treasury said the yield could be considered low, noting that bonds with the same maturity and issued by other countries in the region carried higher interest rates.

National Treasurer Rosalia de Leon said the result of the auction on Wednesday indicated a strong appetite among investors for Philippine debt securities in the wake of favorable developments on the domestic front. The bond auction followed the announcement by the National Statistical Coordination Board that the Philippine economy grew by a faster-than-expected 7.1 percent in the third quarter from a year ago. This brought the average growth for the first three quarters of the year to 6.5 percent.

“This exercise [onshore sale of dollar-denominated bonds] exhibits the [Philippines’] determination to take advantage of opportunities in the market that allows us to improve our debt portfolio,” De leon told reporters after the auction.

The government found it prudent to raise dollars from the local market given the excess foreign exchange liquidity of banks in the country. De Leon said borrowing dollars from the local market was less expensive for the government.

Raising dollars from the domestic market was also advised by the Bangko Sentral ng Pilipinas to ease the appreciation pressures on the peso. Had the government secured dollars from abroad, the resulting foreign exchange inflow could have led to a further strengthening of the peso, which has risen by about 7 percent since the start of the year against the greenback.

Proceeds of the dollar bonds will be used to pay the maturing obligations of the national government and meet the expenditure requirements of the state-owned Power Sector Assets and Liabilities Management Corp..

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Tags: auction , Bonds and t-bills , onshore dollar bond , Philippines

  • pinoypower

    Good sign of investors’ confidence. Take note that these are local investors and if the international players come in with their FDIs then we are in for further economic growth. The poor who claim not to feel the gains of the economic progress must equip themselves with available free education and training from TESDA and public schools so that they will be ready when the opportunities come as a result of the economic progress.

  • http://profile.yahoo.com/36O4ZGE5JY24XE4XQOXBM6O4WE Klepto

    Naku marami na naman nanakawin ang mga buwayang pulitiko natin. Mas lalo gaganda ang negosyo ng may ari ng Amanpulo resorts dahil doon dinadala nga mga pulitiko ang mga artistang PokPok.

    • lucidlynx

      Kailan ba nalugi ang isang negosyante sa pag-invest sa government bonds? Yan ang pinaka-secure na investment kasi hindi naman naba-bankrupt ang bansa lalo na kung maganda ang projections. Huwag kang bibili ng bonds sa mga European countries kasi medyo tagilid sila ngayon lalo na ang Greece.

      Kahit sa panahon ni GMA, secured ang investments sa bonds. May dividendo pa rin.

      Bakit ka puro negative, Klepto?

    • OFW28

      Haahha!! totoo ba yan o kwentu mo lang, dapat video mo sila para post mo sa youtube.

  • Protect_Cheap_Dog

    When will the government offer the “LIBERTY BOND” to fund our country’s defense?

    • lucidlynx

      Anong liberty bond? Spending on the military doesn’t produce income. Tignan mo ang nangyari sa U.S. nung panahon ni GW Bush. Dapat ang mare-raise na funds mapunta sa infrastructure building, health care, education, etc. A healthy and bright nation is productive. Pero kung tatanga-tanga at sakitin, walang mapo-produce.

      • Protect_Cheap_Dog

        Every country needs to fortify its defense perimeter and has all the rights to protect its sovereignty. A vibrant economy without security is nothing and unsustainable!

        The US economy’s recession is due to the property bubble and a slowdown of manufacturing orders and not because of American’s military spending!

        Peace can only be achieved if no one can overpower you and as long as the country is using her armed forces in a defensive mode then PH will be okay!

        Liberty Bond will bail us out from threats coming from our bully neighbor China. A good Missile Defense System plus Modern Air Force and Navy will for sure deter external aggression. It will also give us some form of leverage in dealing with other countries regarding our territorial disputes with them!

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