Govt curbs debt refinancing risks


Offers 25-year dollar bonds with 4.2% yield The Philippines is offering new 25-year dollar bonds, due 2040, with yields of 4.2 percent for old debts maturing from January 2016 to October 2034. It is also offering cash for investors who decide not to buy the new bonds.

The new bond issue was assigned a provisional rating of (P)Baa2 by Moody’s Investors Service as it lauded the Bureau of the Treasury for proactively addressing refinancing risks by lengthening the average maturity of its local currency debt to about 13 years, from about seven years as of end-2009.

“In addition, the Treasury has refinanced maturing debt at lower interest rates, thus enhancing debt affordability,” it said.

The credit rater said the Philippines’ Baa2 government bond rating is supported by improvements in government finances with ongoing debt reduction.

It noted that the decline in Philippines’ debt burden coincided with improvements in fiscal management supports the country’s funding profile.

“External liquidity risks for the Philippine government are limited as its reliance on external sources of financing due to the stable funding base provided by ample onshore liquidity conditions,” it said.

At the same time, Moody’s noted that the proportion of government debt denominated in foreign currency continues to fall.

The settlement of the new bond offering is expected to occur on January 20, 2015.

The government said the submission period will commence at or about 8 p.m., New York City time, on January 5, 2015 (9 a.m., Manila time, on January 6, 2015).

Meanwhile, the submission period will expire at 4 p.m., New York City time, on January 6, 2015 (5 a.m., Manila time, on January 7, 2015) unless extended or earlier terminated.

Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs (Asia) L.L.C., The Hongkong and Shanghai Banking Corporation Limited, J.P. Morgan Securities LLC, Morgan Stanley & Co. International plc, Standard Chartered Bank and UBS AG, Hong KongBranch will act as joint lead managers for the new bond offering.

In January last year, the Philippines successfully offered $1.5 billion of its 10-year US dollar-denominated global bonds upon signaling its return to the international capital markets.


Please follow our commenting guidelines.

Comments are closed.