PH eurobond offering attracts huge demand

The Philippines successfully returned to the international capital markets after investors swarmed on the offering of 750 million euros of eight-year global bonds, the Bureau of the Treasury said Friday.

The eurobonds are expected to receive an investment grade or “Baa2” from global debt watchers Moody’s Investors Service, “BBB+” by Standard & Poor’s, and “BBB” by Fitch Ratings. The notes are expected to settle on May 17, 2019. 

National Treasurer Rosalia de Leon said the Philippines “garnered outstanding support from high-quality accounts with a large order book, allowing us to increase our base offering size from EUR500 million to EUR750 million.” 

“The successful transaction allowed us to diversify our funding program to support productive spending for infrastructure and social services,” she said.

She said the issuance marked the country’s return to the European capital markets after more than a decade.

“The overwhelming reception from the market allowed the pricing for the newly issued global bonds to tighten at EUR Midswaps +70 bps after being revised twice from an initial pricing guidance of EUR Midswaps+90-100 bps area,” she said.

By geographical allocation, 24 percent of the bonds were sold to Germany, 15 percent to Italy, 10 percent to the UK, 26 percent to the rest of Europe, 9 percent to the US, 6 percent to the Philippines, 5 percent to the rest of Asia and the balance to other countries. 

In terms of investor type, 59 percent went to fund managers, 24 percent to banks and corporates, 11 percent to insurance, pension funds and official institutions, and the remaining 6 percent to other types of investors. 

Finance Secretary Carlos Dominguez III said the successful transaction “is a testament to the international investor community’s vote of confidence in the country’s strong macroeconomic fundamentals and sustained high growth prospects despite global financial headwinds.” 

Dominguez said following the successful float of bonds in China and Japan, the government had now issued global bonds in Europe as part of its efforts to diversify funding sources for its aggressive investments in infrastructure and human capital development. 

Proceeds of the issuance will be used for the general government purposes, including budgetary support. 

Deutsche Bank and UBS acted as joint global coordinators, while BNP Paribas, Credit Suisse, and Standard Chartered Bank acted as joint book runners for the transaction. 

Officials earlier said the sale of the euro-denominated bonds came at a perfect time after S&P Global Ratings upgraded the country’s credit rating to “BBB+” from “BBB” with a “stable” outlook earlier this week.

De Leon said the upgrade by S&P was a “recognition of our sound policies on liability management.”  

“We have kept our debt in check—even as we invest more on infrastructure and social services. We are committed to fiscal discipline, and this makes the Philippines a truly creditworthy sovereign in the eyes of the international financial community,” she said.

Topics: euros , eurobond , global bonds , Bureau of the Treasury
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