MANILA – The Philippines on Tuesday announced that it has sold $2 billion worth of 25-year bonds to foreign investors at low rate.
According to the Investor Relations Office, about $13.5 billion in tenders was generated by the new Republic of the Philippines (ROP) bonds at the lowest ever global IOUs of 3.95 percent.
“We continue to pursue liability management transactions that provide opportunities to reduce high coupon debt while achieving interest expense savings, which the government can instead use for more inclusive initiatives,” said Finance Secretary Cesar V. Purisima.
Meanwhile, National Treasurer Rosalia V. de Leon revealed that the cash order book was 15 times oversubscribed at $7.9 billion, while the liability management order book reached $6.1 billion in market value terms.
Out of the number of tenders, majority came from the United States at 47 percent, with 41 percent in Asia and 12 percent from Europe.
The Department of Finance said in a statement that the performance of this year’s offshore bond “marked [the Philippine government’s] return to the international capital markets with a showing consistent with its now emergent sterling reputation.”
Purisima added, “It took courage and conviction to pursue a strategic transaction in the midst of global market volatility. Strong economic fundamentals and a track record of well-placed deals allowed the ROP to be the first issuer in the global dollar market and to execute a $2-billion 25-year bond at an all-time low coupon of 3.95 percent.”
De Leon shared that the ROP issuance “attracted new name, investment grade-only investors.”
“This robust response from the international markets reflects that our manifest confidence in the strength of the Philippine economy and liability management strategy is very well-placed,” De Leon said.
About $500 million will be allocated to fund the budget, while the remaining $1.5 billion will go to retiring of old bonds.
“Despite the volatility we have seen at the start of the year, we continue to see strong support by investors in our bond program, which enabled the [ROP] to achieve a stronger fiscal position for the Philippines. The series of liability management programs has significantly reduced debt repayment risks,” de Leon said.