Treasury defers offshore bond sale

The government would delay the planned foreign bond sale in the first quarter amid volatility in global markets, National Treasurer Roberto B. Tan said on Tuesday.

“These times are not the right time. It’s something we should monitor more closely, when we’re already prepared for a launch in the future,” Tan told reporters when asked about updates on the planned sovereign bond issuance.

“Definitely, we will go to the market when we think the conditions are advantageous and conducive,” he added.

Last December, President Benigno Aquino III gave the go-ahead for a $2-billion offshore bond sale, although the Philippine government was still seeking approval from the US Securities and Exchange Commission (SEC) to push through with the transaction. Shelf registration will allow the sale of securities through a single prospectus for multiple, future offerings.

The Bureau of the Treasury plans to raise $750 million in sovereign bonds for new money while the rest would be for liability management.

As early as November, the policy-making Monetary Board of the Bangko Sentral ng Pilipinas approved the planned sovereign bond issuance as the Treasury was then considering to borrow overseas earlier than usual.

However, the plan for an offshore bond offering before 2015 ended was eventually scrapped as undertaking shelf filing with the US SEC would take some time.

In the past few years, the Philippines tapped the offshore bond market early in the year. For instance, the government sold $2 billion in 25-year bonds in January last year at a record-low coupon of 3.95 percent.

Meantime, the Treasury partially awarded bids for the P25-billion re-issued 10-year treasury bonds it offered yesterday.

The Treasury accepted P22.18 billion at a higher average rate of 4.218 percent even as tenders reached P28.08 billion.

“Although we partially rejected, I think the bids were serious bids. The reference was really market direction as well as the demand side,” Tan said.

He noted that the auction reflected goings-on in the market. “First of all, the US Federal Reserve decision of increasing [interest rates], and then some anticipation of future Fed hikes as communicated by the Fed. Then of course, China’s effect on the capital markets is really creating some uncertainty. But I think for the Philippines particularly, on deep ISINs [International Securities Identification Number, which identify specific securities] like this one, we have observed quite a stable behavior in the trading performance. So this is quite reflective of market concerns and price,” he explained.