Philippines raises P30.8B from bonds

The government has raised P30.8 billion ($750 million) from the issuance of 10-year peso-denominated global bonds, the Department of Finance said.

The bonds, also called global peso notes, or GPN, were priced at face value and carry a coupon of 3.9 percent a year.

Officials said 41 percent of the 10-year GPN was awarded to buyers from the United States, 30 percent to those from Asia, and the remainder to European investors.

“The transaction allowed global investors the opportunity to participate in the impressive growth story of the Philippine economy,” Finance Secretary Cesar V. Purisima said in a statement. The Philippines “is considered today to be one of the safest emerging market sovereigns to invest in.”

The bonds represent the Philippines’ first foray into the global commercial debt market after attaining credit ratings of one notch below investment grade from all three major international rating agencies—Fitch Ratings, Moody’s Investor Service and Standard and Poor’s Ratings Services.

Moody’s was the last one to give the Philippines a rating upgrade, which it did last month.

Also, this is the third time that the Philippines issued such notes.

The proceeds are meant specifically to help buy back as much as $1.5 billion in outstanding Philippine bonds denominated in US dollars and euros.

However, the government may also use the proceeds for general purposes, including budgetary support.

Late last Thursday, the government announced its invitation for bondholders to offer to sell their dollar and euro notes, which expires at closing hours on November 15, New York time.

Finance Undersecretary Rosalia de Leon, incoming National Treasurer, said positive investor perception of Philippine credit allowed the government “to achieve our objective of redenominating our debt into the local currency.”

For this issuance, Credit Suisse, Deutsche Bank and HSBC acted as joint global coordinators as well as joint bookrunners—for this latter function working with Citi, Goldman Sachs, JP Morgan, Morgan Stanley, Standard Chartered Bank and UBS.

Also, according to the Bangko Sentral ng Pilipinas, a total of about $15.7 billion in outstanding bonds are eligible for repurchase under the offer.

The same banks were tapped to help in this second transaction.

Purisima said the fresh float and the buyback are part of efforts to improve the country’s debt profile by lengthening maturities, reducing bunching up of maturities, and increasing the country’s peso-denominated portfolio while at the same time reducing the foreign currency component of our debt.

“We are rebalancing (our) external liabilities to reduce exposure to exchange rate risks,” he explained. “We believe that this rebalancing, in turn, will help position the country for further positive ratings action by the credit rating agencies.”