PH sells $2-B bonds at record low 3.7%

The Philippines on Thursday sold $2 billion in 25-year global bonds at a record-low yield of 3.7 percent, which the government said reflected sustained investor confidence in the country amid volatile global markets.

The Department of Finance (DOF) said the coupon for the US dollar-denominated sovereign bonds maturing in 2041 was not only lower than the initial pricing guidance of 4 percent but also the lowest ever for an offshore issuance.

“The transaction is also the first sovereign US dollar bond issuance and the longest-dated US dollar bond issuance from Asia this year,” the DOF added.

Of the proceeds, $500 million will be new money to be infused into the budget while $1.5 billion will be switched to retire previously issued IOUs maturing between October this year and October 2034.

“We have been closely monitoring market conditions to ensure we can navigate against a challenging and volatile environment. The strong support that we received from our investors in this transaction is a sign of confidence on the reforms and strategies that the [government] has institutionalized,” National Treasurer Roberto B. Tan said.

“The [Philippines’] stellar track record in executing liability management transactions underpins the Aquino administration’s firm commitment to proactive risk management. By leveraging on these opportunities to reduce high-coupon debt and to extend the maturity of our debt portfolio, the country achieves valuable savings that we can use to target broad-based and inclusive growth and development,” Finance Secretary Cesar V. Purisima said.

The DOF said $8 billion in bids were received for the new cash component while $5.6 billion were tendered for the one-day accelerated switch tender offer.

More than half or 51 percent of the tenders for the global bonds came from the United States, 32 percent from Asia and 17 percent from Europe.

The joint global coordinator and dealer managers for the bond sale were Citigroup, Deutsche Bank, HSBC and Standard Chartered while the joint bookrunners were Citigroup, Credit Suisse, Deutsche Bank, HSBC, J.P. Morgan, Morgan Stanley, Standard Chartered Bank and UBS.

“This is a fantastic result for the [Philippines]. Although market volatility has made capital market funding more challenging, the pricing for the new transaction makes clear that investors continue to have strong demand for the Philippines’ credit given its resilient and improving credit story,” HSBC Philippines president and chief executive Wick Veloso said in a separate statement.