Philippine eyeing $1 billion Samurai bond issue around September

June 19, 2018

Finance Secretary Carlos Dominguez III confirmed on Tuesday that the Philippines is planning to issue about $1 billion-worth of “Samurai” bonds this year following its two successful floats of dollar- and renminbi-denominated securities in the offshore markets in the first quarter.

Buoyed by the tight spreads of the Philippines’   earlier bond issuances this year, Dominguez said such developments “indicate confidence in the fiscal and debt management of the Duterte administration,” the Department of Finance said in a statement from Tokyo where the Philippines is briefing Japanese government and businessmen on the economy.

In showcasing the Philippines’ vibrant economic prospects, Dominguez recalled that when the government issued $2 billion-worth of 10-year dollar denominated bonds in January, its spread was 37.8 basis points (bps) over the US Treasuries, while its maiden “Panda” bond float of 1.46 billion renminbi in March had an even tighter spread of only 35 bps over the benchmark.

“This year, we are also planning to issue around one billion US dollars worth of ‘Samurai’ bonds,” Dominguez told Japanese businessmen during his opening remarks at the Philippine Economic Briefing   at the Imperial Hotel.

The finance chief gave no other details of the planned yen-denominated bond float in his speech, but he has said earlier that the government will proceed with it by September or October of 2018.

National Treasurer Rosalia de Leon also quoted the same amount of “about $1 billion” in an earlier interview with reporters.

This year’s briefing, which showcases the Philippines’ economic resilience amid its goal of spurring infrastructure development to achieve inclusive growth, is the second held in this Japanese capital since last year.

In his remarks, Dominguez said bilateral relations between the Philippines and Japan have emerged “closer and stronger” these past few years as the former rises to join the elite group of Asia’s tiger economies, fueled by its long-term goal to achieve zero poverty rates about two decades from now.

To date, Japan has been the Philippines’ major source of official development assistance (ODA) a reliable ally in terms of infrastructure support from the period of reconstruction, one of its top trading partners, and its fourth largest source of foreign tourists, Dominguez said.

He thanked Japan and its people for their continuing support to the Philippines’ economic emergence as well as its support for the reconstruction and rehabilitation of the devastated city of Marawi in Mindanao.

Joining Dominguez at the briefing were Socioeconomic Planning Secretary Ernesto Pernia, who gave an overview of the latest Philippine economic performance and the government’s socioeconomic priorities; Budget Secretary Benjamin Diokno, who discussed the country’s fiscal strategy and budget reforms; and Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr., who provided an update on the monetary, external and financial sectors.

Transportation Secretary Arthur Tugade and Public Works Secretary Mark Villar presented the latest developments in the infrastructure and transport sectors, while Vivencio Dizon, the president of the Bases Conversion and Development Authority, talked about the developments in the envisioned New Clark City at the former US military base in Pampanga.

“As we modernize our infrastructure and accelerate our growth, we look forward to increased investment flows from Japanese companies,” Dominguez told Japanese businessmen gathered at the event.  “We are impressed with the commitment to excellence that imbues your corporate culture. We hope to benefit from the transfers of technology that invariably tracks investment flows.”

In his speech, Dominguez cited Japan’s support for at least three flagship infrastructure projects under the Duterte administration’s “Build Build Build” program, namely, the 1) Cavite Industrial Area Flood Risk Management Project, 2) the Arterial Road Bypass Project Phase III; and 3) the first phase of the Metro Manila Subway Project, which is the Philippines’ first-ever underground rail system.

These projects are among the fruits of the regular discussions held between the two countries through the Philippines-Japan Joint Committee on Infrastructure Development and Economic Cooperation, which was convened just in March last year, Dominguez said.

Japan has formalized loans and grants totaling about $1.25 billion to the Philippines.  DMS