PHL launches dollar bond offering

REUTERS

THE PHILIPPINES returned to the global bond market again this year via a three-tranche, US dollar-denominated bond offering.

This is the first global bond offering under the Marcos administration, which took office on June 30.

Documents from the Bureau of the Treasury (BTr) showed the offering consists of dollar bonds with tenors of five years and 10.5 years, as well as 25-year green or sustainability bond, at benchmark size or at least $500 million.

The initial price guidance for the five-year and 10.5-year tenors are set around the level of Treasuries plus 155 basis points (bps) and 220 bps, respectively, the document showed.

The 25-year sustainability bonds are set around 6.550%.

Proceeds of the bonds would be used for general budget financing, as well as the financing or refinancing of assets in line with the Philippines’ sustainable finance framework.

BofA Securities, Goldman Sachs, HSBC (B&D), JPMorgan, Morgan Stanley, SMBC Nikko, Standard Chartered Bank, and UBS have been tapped as joint bookrunners. The latter two are designated as sustainability structuring banks.

S&P Global Ratings assigned a “BBB+” long-term foreign currency rating to the US dollar senior unsecured notes to be issued by the Philippines, while Fitch Ratings gave it a “BBB” rating.

Moody’s Investors Service also assigned the notes a senior unsecured rating of “Baa2” which mirrors the Philippine government’s issuer rating.

The five-year notes will mature in October 2027, the 10.5-year bonds in April 2033, and the 25-year sustainability bonds in October 2047.

Finance Secretary Benjamin E. Diokno previously said that 69% of the current debt stock was sourced domestically. The government targets to increase that to 75% this year, and to 80% in the longer term, to minimize foreign exchange risks.

In a Viber message to reporters, Mr. Diokno said that while 75-25 is the preferred mix, “sometimes one has to be opportunistic.”

The government raised $559 million from a yen-denominated Samurai bond issue in April, and sold $2.25 billion worth of dollar-denominated notes in March.

Last year’s offshore debt issues by the Philippines included $3-billion dual-tranche global bonds, the 2.1-billion-euro triple-tranche global bonds, and the 55-billion-yen Samurai bonds.

The government will borrow from local and external sources to help fund a budget deficit capped at P1.65 trillion this year, equivalent to 7.6% of GDP.

The National Government’s outstanding debt rose to a record-high P13.02 trillion at the end of August due to additional domestic borrowings and a weak peso.

As of the second quarter, the Philippines’ debt-to-gross domestic product (GDP) ratio was at 62.1%, above the 60% threshold deemed sustainable for developing countries. The government intends to bring it down to 52.5% by 2028. — Diego Gabriel C. Robles