PH launches $2-billion global bond sale

Finance Secretary Carlos Dominguez III. PRESIDENTIAL PHOTO

The Philippine government has launched its $2-billion global offering of 10-year bonds, with $1 billion in new money aimed to be raised to finance the budget and infrastructure projects.

In a notice Thursday, the government said it started to offer the US dollar-denominated bonds due 2028 on Jan. 18, with settlement of the new bonds on Feb. 1.

The rate will be determined Thursday night Manila time.

Designated as joint lead managers were Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Morgan Stanley & Co. LLC, Standard Chartered Bank, and UBS AG Hong Kong Branch.

The government also sought to swap $1 billion for 14 earlier issued bonds due 2019 until 2037.

The deadline of submission of offers for the bond swap will be early morning on Jan. 19, Manila time.

Settlement of the swapped bonds will be on Jan. 25.

Bureau of the Treasury officials had said the increase in the new money component for the upcoming dollar bond issuance—more than the usual $500 million in recent years—will augment financing of the government’s higher infrastructure spending requirements under the ambitious “Build, Build, Build” program.

Before 2017 ended, economic managers raised the share of foreign borrowings in this year’s financing program on the back of the government’s upcoming foray in the Chinese and Japanese debt markets.

The Cabinet-level Development Budget Coordination Committee in December raised to 26 percent the share of external borrowings in 2018 from 20 percent previously, while it kept the 80-20 ratio in favor of domestic sources from 2019 to 2022.

Finance Secretary Carlos G. Dominguez III had said that the share of foreign borrowings for this year was increased due to the yearly global bond sale as well as the planned “panda” and “samurai” bond issuances in China and Japan, respectively.

Dominguez had noted that 2018 would be a good time to tap global debt markets before the US Federal Reserve again hike interest rates.

As for the planned panda bond sale, Dominguez had said it was pushed back to this year from an earlier plan to do so last year as the Treasury was still awaiting final approval from the People’s Bank of China.

In November, the Philippine government signed an underwriting agreement with the Bank of China for the issuance of $200-million or about 1.4-billion renminbi in three- to five-year panda bonds.

Dominguez had also said they plan to issue samurai bonds, yen-denominated IOUs issued in Tokyo by non-Japanese firms towards the end of this year to “diversify” the sources of external financing. /je