PH eyes sale of $1B in dollar bonds; T-bill rates ease across the board

The Philippines is selling at least $1 billion in 10- and 25-year US dollar-denominated global bonds to investors offshore while awarding P24 billion in treasury bills on Monday amid strong demand and declining rates.

The Bureau of the Treasury again sold more than its P20-billion T-bills offering as it awarded P7 billion in the benchmark 91-day, P7-billion 182-day and P10-billion 364-day securities.

Average rates declined to 2.617 percent for the three-month debt paper (from 3.113 percent last week); 2.831 percent for the six-month IOUs (from 3.239 percent), and 3.054 percent for the one-year securities (from 3.295 percent).

Tenders across the three tenors totaled P91.15 billion, making the auction more than 4.5 times oversubscribed.

As such, the Treasury opened its tap facility window to sell another P10 billion in 364-day bills to the 11 government securities eligible dealers (GSEDs).

National Treasurer Rosalia V. de Leon said the market was “flushed with liquidity,” while rates dropped following “reassuring” statements from Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno, who last Saturday said that the BSP still has policy space and would use its entire arsenal to keep the Philippine economy afloat despite a looming contraction in gross domestic product (GDP) this year due to the COVID-19 pandemic.

De Leon added that investors were bullish because of recent official development assistance (ODA) inflows augmenting the national government’s resources in the fight against COVID-19.

Last week, the World Bank approved a $100-million loan for the Department of Health’s COVID-19 response, while the Manila-based Asian Development Bank gave its go-ahead for $1.5 billion in budgetary support for programs and projects to fight the disease.

The government plans to borrow P310 billion more from foreign lenders to augment its COVID-19 funds, on top of the programmed record-high P1.4 trillion in borrowings under the 2020 budget to finance a projected wider budget deficit of P990.1 billion, equivalent to 5.3 percent of GDP.

Also, De Leon said that the Philippines’ announcement on Monday of issuing in the dollar market buoyed domestic demand for T-bills, but she declined to comment on the global bond offering.

According to wire reports, the Philippines was considering benchmark sizes of $500-700 million each for the two tenors.

The joint book runners are Citigroup, Credit Suisse, Goldman Sachs (Asia) LLC, Morgan Stanley, Standard Chartered Bank and UBS.

Finance Secretary Carlos G. Dominguez III had said that commercial borrowings would be next in line as COVID-19 response funding sources once cheaper ODA from multilateral lenders and bilateral development partners were exhausted. —Ben O. de Vera INQ