The PHILIPPINES on Thursday launched its offering of two US dollar international bonds, as well as a euro stability bond, a symbol.its first campaign in the international debt market this year.
In a statement, the Bureau of the Treasury (BTr) announced its 10- and 25-yearinternational bonds with a fixed rate of one year and seven-A continuous euro per yeary bonds.
“This marks the Republic’s first ever EUR (euro) stability bond and marks the Republic’s return to the EUR bond market from April 2021. The USD (US dollar) 25-year Global Bond and the EUR 7-year will be issued under the Republic’s Sustainable Financing Framework,” the Ministry of Finance said in a statement.
National Treasurer Sharon P. Almanza said in a Viber message that the government intends to issue benchmark bonds.
Benchmark-sized issues typically cost at least $500 million.
The treasury said that the proceeds from the sale of 10-year bonds will be used general budget funding.
Proceeds from the 25-year dollar and seven-year euro sustainability bond will be used to refinance assets in line with the Philippines’ Sustainable Finance Framework.
“Initial price guidance (IPG) for USD 10-year and 25-year Treasuries was announced at +120 basis points (bps) and 6.100% area respectively, while the IPG for EUR 7-year tranche was declared in MS. (between exchanges) +160 bps locally,” said the Finance Ministry.
The transaction was scheduled to be priced during the New York session on Thursday.
“Since there is a positive market developing during the week, we see an opportunity for the Republic to re-enter the financial markets. Our goal is to use the current market momentum to secure the most effVariable costs before possible uncertainties in the near future. We look forward to the continued support of our valued investors,” Ms. Almanza said in a statement.
Citigroup, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley, Standard Chartered and UBS joint supervisors and joint librarians.
HSBC, StanChart and UBS are also banks that embrace sustainability.
The trader said in a written message that demand for the global bond offering could reach $2 billion.
“I think this is a re-do of the rising dollar bond,” the trader added.
According to Bloomberg News, the Philippines has about $1.5 billion in dollar bonds due in March and €650 million in euro-denominated debt in April.
Chief Expert of Rizal Commercial Banking Corp. Michael L. Ricafort said in a Viber message that bond sales may be attractive to investors looking for higher returns as US Treasury yields rise.
“We expect strong demand from foreign investors who want to take advantage of the yield,” said the same trader.
“Therefore, the bids/demands from international investors can be very high, thus it can still lead to low cost of production/borrowing for the National Government,” said Mr. Ricafort.
On the other hand, Reyes Tacandong & Co. Senior Advisor Jonathan L. Ravelas, said in a Viber message that the government can collect “$3.5 billion and reach $5 billion” in international bonds.
“The timing could be right as US 10-year yields take a breather,” he added.
Fitch Ratings has assigned the Philippines’ proposed US dollar and euro bonds a “BBB” rating, similar to its sovereign credit rating.
S&P Global Ratings also rated the bonds at “BBB+,” which corresponds to the sovereign credit rating of the Philippines.
Finance Secretary Ralph G. Recto said last week that the Philippines is looking to raise $3.5 billion this year from the global debt market, most of which will be in dollars. – AMC Sy with Bloomberg
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