PH sells 10-year dollar bonds at tighter yield of 3%

Finance Secretary Carlos G. Dominguez III MALACANANG FILE PHOTO

The Philippines sold a total of $2 billion in 10-year dollar-denominated bonds at a yield of 3 percent, tighter than the initial pricing guidance.

In a statement Friday, Finance Secretary Carlos G. Dominguez III said $750 million was allocated to new money investors, while $1.25-billion worth were switched with 14 outstanding US dollar bonds maturing between 2019 and 2037.

The original plan was to issue $1 billion in new money on top of a $1-billion bond swap.

“The new bonds were priced at par with a coupon of 3 percent, tighter than the initial pricing guidance of 3.3 percent area and a final spread of 37.8 basis points over US Treasuries,” Dominguez said, noting that the country enjoys investment grade ratings from the three top debt watchers Fitch Ratings, Moody’s Investors Service, as well as Standard & Poor’s.

“The strong support that this 10-year global bond float has received in the international capital markets is a testament to the deepening investor confidence in the country’s newfound status under the Duterte presidency as one of the world’s fastest-growing economies,” according to Dominguez.

“The capital raised from this bond float plus the additional revenue take from the newly implemented TRAIN Law will help bankroll President Duterte’s ‘Build, Build, Build’ program to modernize the country’s infrastructure, sharpen its global competitiveness and sustain rapid—and inclusive—growth as well as financial inclusion for all Filipinos,” Dominguez added, referring to the Tax Reform for Acceleration and Inclusion Act.

Also, “this liability management exercise is in line with the republic’s goal of achieving significant cost savings through the reduction of overall interest expense,” the Finance chief said.

For the issuance of new global bonds, the joint deal managers and book runners were Citigroup, Credit Suisse, Deutsche Bank, Morgan Stanley, Standard Chartered Bank and UBS.

Citigroup and Standard Chartered were also joint global coordinators for the new bond issuance as well as deal managers for the bond swap.

This year marked the first time that the Philippine government issued 10-year dollar bonds since 2014. /jpv