Named Asia’s “Best Borrower’ by HK magazine

PH ‘a sophisticated sovereign issuer’

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THE Philippines has been cited as Asia’s “best borrower” by Hong Kong-based FinanceAsia magazine for the country’s innovative execution of a $1.5 billion bond issue completed in January 2014, its first ever transaction as an investment grade sovereign.

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The Philippines earned the “Region’s Best Borrower” award from FinanceAsia’s Fixed Income Research Poll 2014, which identifies Asia’s best borrowers, analysts, rating agencies and research houses.

The magazine cited the country’s Accelerated 1-Day Switch Tender Offer and the concurrent $1.5 billion new 10-year bond issue completed last January.

It said the tender offer was the first of its kind conducted in Asia, proving the Philippines’ sophistication as a sovereign issuer.

“We are thankful for the recognition given by the international investors’ community in response to our efforts in proactive liability management,” Treasurer of the Philippines Rosalia de Leon said.

The recognition reflects well on the development of the Philippine debt market and emboldens the government to pursue more innovative strategies to managing sovereign debt, according to de Leon.

For the said transaction, the Philippines targeted 11 series of bonds with a notional value of $9.6 billion, where tendering investors could choose between switching into the new bond or tendering for cash, with Deutsche Bank Securities Inc., Hong Kong and Shanghai Banking Corp. Ltd. and Standard Chartered Bank acted as joint lead global coordinators for the transaction.

“The bonds were tendered through dealer managers, saving
time and reducing market risk exposure for the Philippines.

Global investor response to the new 10-year bond issue was 9-times oversubscribed, with an orderbook of approximately US$ 13.5 billion from 500 investors reflecting strong demand,” it stated.

This also marked the first international US dollar offering from the Philippines since January 2012 and its first as an investment grade sovereign, it added.

The magazine said robust investor demand allowed the Philippines to aggressively price the securities and realize cost savings while extending the maturity of outstanding debt.

“The transaction also enabled the country to retire outstanding high coupon bonds, further bolstering fiscal strength through prudent and proactive liability management,” it added.

Meanwhile, FinanceAsia noted that the earlier transaction was followed by a domestic bond exchange in August as part of the strategy to rebalance the domestic portfolio and term out maturities.

It also highlighted the government’s efforts to boost the development of the local capital market in promoting liquidity in the government securities market and consolidating its debt portfolio.

“This was achieved by increasing the volume at auction and the re-issuance of outstanding benchmark securities. The success of this strategy is evidenced by the year-on-year decline in the number of outstanding securities and the secondary market activity of re-issued securities,” it said.

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