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.
In a statement, the Department of Finance (DOF) said that the new issue of global bonds occurred concurrently with a 1-day Tender Offer for 11 series of dollar-denominated bonds maturing between 2015 and 2025.
“This issue of the Global Bonds marks the first international USD [US dollar] offering from the Republic since January 2012 and the Republic’s first-ever international investment-grade issuance, achieving ratings of ‘Baa3’ from Moody’s Investor Services, ‘BBB-‘ from Standard and Poor’s, and ‘BBB-’ from Fitch Ratings,” it stated.
The newly issued Global Bonds were priced at par with a coupon of 4.20 percent. Order books were in excess of $13.5 billion from about 500 investors.
By geographical allocation, the DOF said that 28 percent came from Asia, 53 percent from the US and 19 percent from Europe.
By investor type, 71 percent was allocated to fund managers, 24 percent to banks and 5 percent to insurers.
The agency said that proceeds of the issuance will be used to fund the Philippines’ switch and tender offer. The government may also use the proceeds for general purposes, including budgetary support.
“The tender offer exercise was primarily targeted at existing bondholders to switch into the new global bonds. The amount of bonds tendered equaled a notional value of $2.6 billion, and the Republic accepted $870 million of offers,” it added.
DOF also said that this liability management transaction also marks the first intraday switch tender offer in Asia, evidencing the Philippines’ sophistication as a sovereign issuer.
“We welcome this opportunity for the Republic to revisit the international markets, to herald its investment-grade status and establish a reference for the country’s credit,” Finance Secretary Cesar Purisima said.
He said that it demonstrates sustained government efforts to reduce the country’s debt burden and to channel more resources into productive endeavors.
“As with our previous transactions, this exercise is in line with the government’s overall objectives of prudent and proactive liability management, and resulted in interest-cost savings as well as extended the average debt maturity profile of the Philippines. The result further bolstered the strength of the government’s financial position,” National Treasurer Rosalia de Leon said.
Deutsche Bank, HSBC and Standard Chartered Bank served as joint global coordinators and dealer managers for the transaction. ANZ, Citi, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley and Standard Chartered Bank acted as joint bookrunners.