By Chino S. Leyco
The Philippine government tapped the international debt markets yesterday, the first Asian nation to borrow overseas, to help support the Duterte administration’s spending program for the year.
In a statement, the Bureau of the Treasury announced yesterday that the national government raised $1.5 billion from the sale of 10-year dollar bonds at a coupon rate of 3.75 percent.
National Treasurer Rosalia V. de Leon said the fresh bond sale received strong demand from investors and was priced at spread of US Treasury plus 110 basis points, below its initial guidance of plus 130 basis points.
According to de Leon, the Philippines’ latest commercial borrowing, which is also first for an emerging market this year, attracted $4 billion offers, signalling strong investor confidence in the country’s economic fundamentals.
About 37 percent of the bonds were sold to Asia, while 28 percent to the US and 35 percent to Europe.
In terms of investor type, 52 percent went to asset managers, 22 percent went to banks, 14 percent went to sovereign wealth funds as well as insurance, and the remaining 12 percent went to private banks and other type of investors.
Following the sale, Finance Secretary Carlos G. Dominguez III said the transaction further illustrated “deepening investor confidence in the Philippines’ growth story and the Duterte administration’s ability to maintain fiscal discipline.”
Dominguez said the government will continue to proceed with its ambitious spending on infrastructure modernization, as well as investing in human capital development and social protection for the poor.
“Proceeds of the issuance will be for the Republic’s general purposes, including budgetary support,” the treasury said in a statement.
For her part, de Leon commented “we have garnered strong support from the global fixed income investor community despite recently heightened volatilities in the global market.”
“This demonstrates strong conviction from the global investor community on the Republic’s economic fundamentals as well as the depth of the Republic’s investor outreach,” she added.
Bank of China, J.P. Morgan, and Standard Chartered Bank acted as joint global coordinators for the transaction, while Citigroup, Credit Suisse, Goldman Sachs (Asia) L.L.C., and UBS acted as joint book runners for the transaction.
The bonds were rated ‘Baa2’ by Moody’s Investors Service and ‘BBB’ by both Standard & Poor’s as well as Fitch Ratings.
The Philippines, one of Asia’s most active sovereign bond issuers, is raising funds to support the budget as President Rodrigo Duterte’s administration boosts infrastructure spending.
Manila’s borrowing plan includes samurai and panda bond offerings this year or in 2020. It is also exploring a first sterling bond sale. (With Reuters)