MANILA, Philippines: The Philippines yesterday successfully sold P30.8 billion or $750 million in 10-year global peso notes (GPN) at a coupon of 3.90 percent.
Finance Undersecretary Rosalia de Leon said global investors snapped up the bonds in a deal that was 7.2 times oversubscribed by investors from all over the world.
“We just priced a $750-million equivalent one-year GPN with a re-offer yield of 3.90 percent,” De Leon said, adding that the transaction allows the government to redenominate its debt into the local currency.
The DOF said proceeds of the issuance will be used to fund the government’s ongoing tender offer of its existing US dollar and euro-denominated bonds.
The Republic may also use the proceeds for general purposes, including budgetary support, it added.
“The newly-issued Philippine peso global bonds, the third of their kind to be offered by the Republic, were priced at 100 percent with a coupon of 3.90 percent. The bookbuilding process took approximately eight hours,” the statement also said.
The bulk of the orders came from the United States or 41 percent while 30 percent came from Asia and 29 percent Europe.
Finance Secretary Cesar Purisima said the transaction allowed investors to join the country’s economic growth story, now rated by the credit rating agencies as just a notch below investment grade.
“The transaction allowed global investors the opportunity to participate in the impressive growth story of the Philippine economy, which is considered today to be one of the safest emerging market sovereigns to invest in,” Purisima said.
The Philippines tapped Credit Suisse, Deutsche Bank, and HSBC as joint global coordinators while Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley, Standard Chartered Bank, and UBS acted as joint bookrunners for the transaction.
This is the government’s first GPN issue for the year and the third of its kind since the start of the Aquino administration.
The Philippines first issued global peso bonds in September 2010, the first in Asia to sell bonds abroad in its own currency.
It sold $1 billion in 10-year global peso bonds in September 2010 and $1.25 billion in January 2011.
The issuance of peso-denominated bonds is among the new initiatives undertaken by the Aquino administration to better manage government debt.
Following the launch of the sale on Thursday, the Investor Relations Office of the Bangko Sentral ng Pilipinas (BSP) announced late Thursday an offer to buy back up to $1.5 billion worth of existing Republic of the Philippines (ROP) bonds.
“Select US dollar and Euro bonds with an equivalent aggregate principal amount of approximately $15.7 billion are eligible for repurchase under the offer,” the Finance department said in a separate statement.
The eligible bonds include some of the bonds maturing in 2014, 2015, 2016, 2017, 2019, 2024, 2025, 2030, 2031 and 2032.
The offer, which is subject to the “availability of the Bureau of the Treasury Funds and the successful offering and sale by the Republic of one or more series of new bonds,” expires on November 15, the IRO said in its announcement.
The buy back offer is part of the government’s debt liability management efforts.
“The liability management exercise is in line with the Republic’s objective of improving the structure of the country’s debt - by lengthening maturities, reducing bunching up of maturities, and increasing the country’s peso-denominated portfolio while at the same time reducing the foreign currency component of our debt,” Purisima said.
He said the government is rebalancing the country’s external liabilities to reduce exposure to exchange rate risks.
“We believe that this rebalancing, in turn, will help position the country for further positive ratings action by the credit rating agencies,” Purisima also said.
The government tapped Credit Suisse, Deutsche Bank, and HSBC as joint global coordinators for the debt liability exercise while Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, J.P. Morgan, Morgan Stanley, Standard Chartered Bank and UBS have been mandated as joint dealer managers for the transaction. (The Philippine Star)
