Samurai market snaps up PH’s $1.39-B bond offer

The Philippines has sold $1.39 billion worth of samurai bonds across three tenors offered, the largest issuance so far this year for yen-denominated securities.

The multitranche, 154.2-billion yen borrowings in Japan had “overwhelming demand from both onshore and offshore investors,” Finance Secretary Carlos G. Dominguez III told reporters in a text message.

The Philippines issued 107.2 billion yen in three-year bonds at a coupon rate of 0.38 percent; 6.2 billion yen in five-year IOUs at 0.54 percent; and 40.8 billion yen in 10-year debt paper at 0.99 percent.

“The three-year tranche was priced 25 basis points above benchmark, tighter than that of the recent panda bond issuance (35 bps). The five-year tranche was priced at 35 bps, and the 10-year tranche was priced at 60 bps above the benchmark,” Dominguez said.

“Overall, the transaction yielded a weighted average spread of 34.7 bps above benchmark. Compared to our peers, we priced tighter and issued more than Indonesia (100 billion yen) and higher-rated Mexico (135 billion yen),” the finance chief added.

Dominguez said it was the largest issuance size for a senior samurai bond in 2018.

The offer ended the eight-year absence of the Philippines in the samurai market. The last issuance was in 2010.

It was also the first time in nearly 20 years that the Philippines issued samurai bonds on a standalone basis, as the previous sale was guaranteed by the Japan Bank for International Cooperation.

Settlement of the samurai bonds was scheduled for Aug. 15.

“This successful return to the samurai bond market is the latest proof of the deepening investor confidence in the Philippine economy under the Duterte presidency. The government’s disciplined fiscal position, along with game-changing reforms starting with the new legislation—the Tax Reform for Acceleration and Inclusion (TRAIN) law—that has modernized and simplified Philippine taxation, have created enough room for our current policy of aggressive investments not only in public infrastructure but in human capital formation as well,” Dominguez said.