Palace, BSP OK $2-B foreign bond sale

Only the Bureau of the Treasury’s final decision on the timing stands in the way of the planned sovereign bond sale, as all regulatory approvals have already been secured for an up to $2 billion in borrowing.

National Treasurer Roberto B. Tan said yesterday the United States Securities and Exchange Commission had issued last week shelf registration for the Philippines to issue up to $5 billion in bonds.

In case the government uses up the $2 billion—the programmed $750 million in new money on top of liability management—in the planned bond issuance for this year, there will remain $3 billion in bonds that may subsequently be sold later.

The Treasury had also secured the necessary approvals from the Philippine government, including those of the Office of the President and the Bangko Sentral ng Pilipinas’ Monetary Board.

Tan said four global coordinators and four lead managers were selected for the bond sale. The global coordinators are Citibank, Deutsche Bank, HSBC and Standard Chartered Bank, while the lead managers are Credit Suisse, J.P. Morgan, Morgan Stanley and UBS.

“We’re continuing to watch developments in the international financial markets. We will make a decision [on the timing of the bond sale] when we think it’s optimal to launch an issue,” Tan said.

Tan nonetheless noted that “conditions are improving” as far as the domestic and global bond markets were concerned.

He said the BTr was looking at issuing bonds with “long tenors.”

Also yesterday, the Treasury fully awarded P25 billion in reissued five-year T-bonds at an average rate of 3.647 percent, down 15.3 basis points from 3.8 percent in the previous auction.

The offering was oversubscribed with P56.002 billion in tenders for the treasury bonds maturing on Aug. 20, 2020.

“We had a very robust set of bids that came in, so we are happy about that. And based on our internal analysis, we were able to achieve better levels than what we were expecting to accept,” Tan said.

Tan attributed the local investors’ increased appetite for debt paper to the recent announcement of US Federal Reserve chair Janet L. Yellen of less or no policy rate hikes this year.