The government on Thursday returned to the international capital markets for the third time this year with the issuance of benchmark three-tranche $2-billion global bonds to augment its budget.
The dollar bond offering was the first under the administration of President Ferdinand Marcos Jr.
Data from the Treasury showed the new 5- ($500 million) and 10.5-year ($750 million) tranches were priced at U.S. Treasury plus 120 and 185 basis points with a coupon of 5.170 percent and 5.609 percent, respectively, or 35 bps tighter than an initial pricing guidance of U.S. Treasury plus 155 and 220 bps, respectively.
The 25-year Sustainability tranche ($750 million) was priced at 6.100 percent with a coupon of 5.950 percent, or 45 bps tighter than initial pricing guidance of 6.550 percent.
The transaction is expected to settle on Oct. 13, 2022.
Finance Secretary Benjamin Diokno said the strong demand for the first international bond offering under the Marcos’ administration demonstrated investor confidence in the new government and the administration’s six-year plan of economic transformation to a more inclusive, resilient and prosperous economy.
“The eight-point agenda of the new administration will improve real GDP growth, improve government finances, protect purchasing power, mitigate socioeconomic scarring and create more quality jobs,” Diokno said.
National Treasurer Rosalia de Leon said the success of the transaction was an indication of the Philippines’ readiness to “brave choppy waters” in pursuit of excellent results.
“Just as we were able to deftly capture a good execution window amid a daunting volatile market environment to attain our financing objectives at favorable cost, we too shall rise above the present difficulties through our eight-point economic blueprint toward differentiating ourselves as the prime destination of choice among quality-conscious investors,” she said. Julito G. Rada
The government intends to use the proceeds from the sale of the 5- and 10.5-year global bonds for general purposes, including budgetary support. The proceeds from the 25-year global bonds will be applied to finance or refinance assets under the Republic’s Sustainable Finance Framework.
Standard Chartered Bank and UBS acted as joint sustainability structuring banks. BofA Securities, Goldman Sachs, HSBC, J.P. Morgan, Morgan Stanley, SMBC Nikko, Standard Chartered Bank and UBS acted as joint bookrunners for the transaction.