The Philippines’ $2.35 billion in US dollar-denominated global bonds fetched record-low coupons for its two tenors, auguring well for efforts to raise much-needed funds for the government, especially for COVID-19 response.
The Bureau of the Treasury also on Tuesday (April 28) sold P30 billion in two-year T-bonds to domestic investors at 3.052 percent.
Tenders reached P109.5 billion, making the auction over 3.5 times oversubscribed.
National Treasurer Rosalia V. de Leon said that the Treasury fully awarded the T-bonds due to “lower rates and appetite now going beyond one year.”
The Treasury opened its tap facility window to sell another P15 billion of the IOUs carved out of five-year debt paper maturing in January 2022.
Last Monday (April 27), the Treasury sold another P10 billion in 364-day T-bills to its 11 licensed debt paper dealers.
The $1.35 billion in 25-year and $1 billion in 10-year global bonds, all new money to be settled on May 5, “achieved the lowest-ever coupon” for such tenors “amid no less than an environment gripped with pandemic fear,” said De Leon.
She said the new 10-year global bonds were priced at US Treasury spreads of T+180 basis points. The 25-year bonds were priced at 2.95 percent.
“This makes the Philippines, at least for the time being, a diamond in the sovereign issuance space,” she said.
“We were able to convert immense pressure into an opportunity to dazzle in brilliant shine,” De Leon said.
She said that the Philippines “capitalized on a short favorable market window amid broader volatility arising from concerns over the COVID-19 crisis.”
The transaction, she said, illustrated the Philippines’ “ability to navigate a challenging global environment and respond efficiently to capture conducive market conditions.”
Finance Secretary Carlos G. Dominguez III said “the strong demand for this bond issue demonstrates the resiliency of investor interest in the Philippine economy despite the global economic fallout from the COVID-19 pandemic.”
“Such support from the investor community is a result of the continued strong macroeconomic fundamentals of the country brought about by the reform agenda of the Duterte administration,” Dominguez said.
He said the success of the bond issuance despite the COVID-19 pandemic was “also reflective of the global recognition” of the Duterte administration’s strategies in mitigating the impact of the COVID-19 crisis.
These included providing immediate financial support to the most vulnerable segment of the population, the poor, and small business employees.
It also included the use of resources to support frontline health workers and increase coronavirus testing capacity.
Among the measures also were “providing liquidity and support to the economy and putting in place an economic recovery plan that is responsive to the needs of consumers and businesses to create jobs and sustain growth,” Dominguez added.
De Leon said that financing for these measures is available through successful domestic and foreign borrowings, loans from multilateral lenders and realignment in budgets and savings.
“We have been expecting another successful US dollar-denominated bond issuance despite the challenges the global economy is currently facing,” she said.
Finance Underesecretary Dennis Y. C. Joven said “solid economic fundamentals and long-term growth prospects” made the successful bond issuance just “a matter of timing.”
De Leon said “we’ll have to see market developments and assess funding costs versus other markets” to decide if any future offshore issuances are viable.
She did not give a categorical answer when asked if the Treasury would still proceed in issuing renminbi-denominated panda bonds and yen-denominated samurai bonds.