Philippines prices 10-Year, 25-Year Dollar Global Bonds

April 28, 2020

The Republic of the Philippines successfully returned to the international capital markets for the second time this year with its offering of $2.35 Billion double tranche 10-year and 25-year Global Bonds, the Bureau of Treasury said Tuesday.

The new 10-year Global Bonds were priced at US Treasury spreads of T+180 bps, after an initial pricing guidance of T+220 bps area.

The 25-year tranche was priced at 2.950 percent, which is 42.5 bps tighter than initial pricing guidance of 3.375 percent area.

The Global Bonds are expected to be rated Baa2 by Moody’s, BBB+ by Standard & Poor’s, and BBB by Fitch.

The transaction is expected to settle on May 5, 2020.

Capitalizing on a short favorable market window amidst broader volatility arising from concerns over the coronavirus disease 2019 (COVID-19) crisis, the Philippines announced this issuance on Monday,.

This opportunistic transaction was launched following a constructive week in AsiaPacific credit markets and illustrates the Republic’s ability to navigate a challenging global environment and respond efficiently to capture conducive market conditions

This deal follows a EUR 1.2 billion double tranche global bond offering by the Republic in January this year, as well as $1.5 billion and EUR750 million global bond offerings in 2019.

Finance Secretary Carlos Dominguez III commented, “The strong demand for this bond issue demonstrates the resiliency of investor interest in the Philippine economy despite the global economic fallout from the COVID-19 pandemic.''

''Such support from the investor community is a result of the continued strong macroeconomic fundamentals of the country brought about by the reform agenda of the Duterte administration,'' he added,

“The success of this bond float despite the COVID-induced volatility is also reflective of the global recognition of, and support for, the Duterte administration's four-pillar strategy to mitigate the impact of the global health crisis,” he said.

“The four-pillar strategy includes providing immediate financial support to millions of the most vulnerable families as well as employees of small businesses; mobilizing resources to support our frontline health workers and increase our testing capacity; providing liquidity and support to the economy; and putting in place an economic recovery plan that is responsive to the needs of consumers and businesses to create jobs and sustain growth.” he added.

National Treasurer Rosalia de Leon said, “The transaction was able to achieve the Republic’s lowest ever coupon for a 10- and 25-year benchmark issuance amidst no less than an environment gripped with pandemic fear. This makes the Philippines, at least for the time being, a diamond in the sovereign issuance space for we were able to convert immense pressure into an opportunity to dazzle in brilliant shine.”

Undersecretary Mark Dennis Joven also added, “We have been expecting another successful USD denominated bond issuance despite the challenges the global economy is currently facing. With the Sovereign’s credibility in the international market,coupled with its solid economic fundamentals and long-term growth prospects, this successful issuance has only been a matter of timing.”

Proceeds of the issuance will be for the country's general purposes, including budgetary support.

Citigroup, Credit Suisse, Goldman Sachs (Asia) L.L.C, Morgan Stanley, Standard Chartered Bank and UBS acted as joint bookrunners for the transaction. DMS