PH plans $500-M ‘samurai’ bond sale

The Marcos administration is poised to enter the Japanese bond market for the first time, planning to issue at least $500 million worth of samurai or yen-denominated bonds to lock in low interest rates.

The proposed bond offer—part of this year’s $3-billion overseas borrowing program—also marks the Philippine government’s return to the Japanese bond market for the first time since April 2022.

READ: P29B in ‘green’ samurai bonds added to PH debt pile

“Based on our advisors, I think it is the optimum time to get lower rates. The idea is to do it for the cheapest borrowing cost,” Finance Secretary Ralph Recto said in an ambush interview during the 74th anniversary of the Philippine Life Insurance Association.

“We are continuously monitoring not only the Japanese yen market but also the other markets for the most opportune issuance windows as well as the most suitable structure to optimize pricing and investor reach,” said National Treasurer Sharon Almanza.

In a surprise move, the Bank of Japan (BOJ) has raised its interest rate by 15 basis points to 0.25 percent from between 0 and -0.1 percent on Wednesday, making it the highest hike since 2008.

BOJ Governor Kazuo Ueda stated that the bank could tighten policy further if necessary.

Nonetheless, the Japanese debt securities market remains attractive to sovereign and institutional borrowers looking for the cheapest funding options.

Soon to launch

In the case of the Philippines, Recto approved the issuance of samurai bonds on July 29 and the offer is now being processed by the Bureau of Treasury. The government will also issue bonds in US dollar and euro denominations in the second semester.

The Department of Finance earlier said it was considering raising funds for its priority projects from yen-denominated securities, or samurai bonds.

The last time that the Philippines had tapped the samurai bond market was in April 2022 during the Duterte administration, when it raised a total of ¥70.1 billion or P28.55 billion.

The last issuance was a four-tranche offering with tenors of five, seven, 10 and 20 years. Coupon rates were recorded at 0.76 percent, 0.95 percent, 1.22 percent and 1.83 percent, respectively. —Mariedel Irish U. Catilogo