PH selling $750M in ‘samurai’ bonds

The Philippines is selling at least $750 million in yen-denominated samurai bonds across four tenors, the government’s last foray into the offshore debt market this year.

On the sidelines of Tuesday’s treasury bond auction, National Treasurer Rosalia V. de Leon told reporters that the Bureau of the Treasury would sell three-, five-, seven- and 10-year bonds in Japan.

“We are already in the market. The official marketing starts today,” De Leon said.

While she earlier said that the Philippines would sell the samurai bonds across only three tenors, she noted of investor interest in the seven-year IOUs.

De Leon said there was also room to adjust the total offering up to $1 billion.

“If we see a very strong book and we want to cut the offering like we do with RTBs (retail treasury bonds), then we can do so; otherwise, we can spill over until next week,” De Leon said when asked how long the marketing for the samurai bonds would last.

De Leon said the government was diversifying its funding sources, hence the return to the samurai bond market.

Last week, De Leon said the government would likely again tap the panda, euro and samurai bond markets next year as it had programmed gross borrowings to hit a record P1.4 trillion in 2020.

Next year’s borrowing mix will nonetheless be 75-percent domestic, 25-percent external.

In August last year, the Philippines sold 154.2-billion yen (about P74.4 billion) worth of samurai bonds across three tenors, ending the country’s eight-year absence as the last issuance was in 2010.

In 2018, 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 debt paper at 0.54 percent, and 40.8 billion yen in 10-year IOUs at 0.99 percent.

Meanwhile, the Treasury also on Tuesday sold P20 billion in reissued 20-year bonds at an average annual rate of 5.015 percent, down 15.5 basis points from the previous yields.

The bonds maturing on Jan. 24, 2039, generated P29.81 billion in bids, making the auction almost 1.5 times oversubscribed.

De Leon attributed the “healthy” auction results to strong demand for the long end of the curve before the US Federal Reserve cuts interest rates this week while the Bangko Sentral ng Pilipinas (BSP) was also widely expected to do the same next week amid easing inflation.

“The market already would like to make sure that they are able to get something from the issuance of the 20-year [treasury bonds] before rates go down eventually because of the possible rate cuts,” she said.