Business

PHL raises $2B in year’s 1st dollar global bonds issuance

MANILA – The Philippines successfully raised US$2 billion from the issuance of the dual-tranche 10- and 25-year Securities and Exchange Commission-registered fixed-rate global bonds.

In a statement, the Bureau of the Treasury (BTr) said the 25-year global bond would be issued under the Republic’s Sustainable Finance Framework.

Despite elevated volatility in the market in recent weeks, the BTr said the Philippines took advantage of improving market sentiment following a softer-than-expected US labor market print, which alleviated concerns over the Fed rate path.

It added that the success of the offering illustrated the country’s ability to navigate an uncertain policy rate environment and respond efficiently to capture conducive market conditions.

“The enthusiastic response we saw from the global investor community for this offering underscores the strength of the Philippine economy and the strong vote of confidence international investors have in President Ferdinand R. Marcos Jr.’s sound economic and fiscal policies,” Finance Secretary Ralph Recto said.

The new 10-year tranche was priced at T+80 basis points (bps), reflecting a tightening of 40 bps from the initial price guidance.

The new 25-year sustainability tranche, meanwhile, was priced at 5.60 percent at par (T+99.8 bps), 45 bps tighter than the initial price guidance.

“We secured funding from the market at very cheap rates, which allowed us to save on borrowing costs. The 10-year spread has been the tightest among all our similar issuances since 2022, while the 25-year sustainability tranche achieved the second-best rate in the government’s history. The tight pricing, especially compared to higher-rated peers, serves as an indication of the country’s exceptional performance beyond its current credit rating and makes a good case for a rating upgrade,” Recto said.

“Proceeds of this issuance will be directed towards the overall welfare of all Filipinos – more infrastructure projects, improved social services, a better health care system, and quality education for them.”

Proceeds from the sale of the 10-year global bond will be used for general budget financing while proceeds from the sale of the 25-year global bond are intended to be used for general budget financing and refinancing programs and expenditures in line with the country’s Sustainable Finance Framework.

“The strong reception and record tight pricing levels attained on this transaction reaffirm the Philippines’ position as a true watermark for quality emerging market credit stories, and the success of the offering in the face of various market uncertainties over the past few months shows the continued confidence of the broader investor community in the progress of our economic development,” National Treasurer Sharon Almanza said. 

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