PH sells euro bonds at record-low rate

The Philippines sold 1.2 billion euros in euro-denominated bonds across two tenors, with the three-year debt paper fetching a zero coupon.

Citing a report from National Treasurer Rosalia de Leon, Finance Secretary Carlos Dominguez III said on Wednesday that the euro bonds were issued in tenors of three and nine years.

In a separate text message, De Leon said 600 million euros each were sold for both tenors, exceeding the benchmark volume of 500 million euros.

“We issued the three-year with a yield of 0.1 percent, allowing us to print at a zero-percent coupon for a global bond with a spread of 40 basis points (bps) over benchmark,” De Leon reported to Dominguez.

As such, “this is [the Philippines’] lowest coupon euro issuance and first ever zero-coupon euro issuance in the international capital markets,” Dominguez noted.

“For the nine-year, we achieved a coupon of 0.75 percent, which is tighter than the 0.875 percent in our previous eight-year issuance last May 2019 despite the longer tenor,” De Leon said.

“Moreover, given the fair value of our outstanding euro bond due 2027 (with a 7.5-year remaining life) being at 67 bps over benchmark, and given a pickup of about 5 bps for every one-year extension, new nine-year should be priced at around 75 bps, yet we managed to pierce through our ROP curve by pricing at 70 bps over benchmark. This translates to a negative new issue concession of approximately 5 bps,” De Leon added.Last year, the Philippines returned to the euro debt market to end the country’s 13-year absence, selling 750 million euros in eight-year bonds. —Ben O. de Vera