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Five Japan banks agree to back Philippine Samurai bond issuance

Five Japanese banks expressed full support for the Philippine government’s planned ‘Samurai’ bonds issuance in the third quarter, the Finance Department said Wednesday.

Top officials of Japan’s five largest banks―the Mitsubishi UFJ Financial Group, Nomura Holdings Inc., Mizuho Bank Ltd., Sumitomo Mitsui Banking Corp. and Daiwa Securities Group Inc.―said they expected strong demand for the Philippines’ Samurai bond float, the first since 2010.

They expressed their interest in separate meetings with Finance Secretary Carlos Dominguez III during the Philippine delegation’s visit to Tokyo.

The Samurai bond sale, planned in September or October this year, would be the first one to be issued by the Philippine government without any guarantee from a Japanese institution.  

The Japan Bank for International Cooperation, through its Market Access Support Facility, guaranteed the bond issue the Philippine government’s Samurai bond sale in 2010.   raised funds through the float of “Samurai” bonds, t

The facility was established to assist Asia’s developing countries in accessing international capital markets following the global financial crisis of 2008.

The Philippines through private banks floated bonds in the Japanese market with seven Samurai bond issues since 1978.  The eighth in 2010 was issued by the Philippine government with JBIC support.   

The ninth bond issuance set this year with no guarantee fees involved would mean lower financial costs for the Philippine government.

Officials of MUFG led by its president and chief executive Saburo Araki said in a meeting with Dominguez there was “strong confidence in the Philippines now and into the future” among Japanese investors.

“We are extremely supportive of the bond issue …We are very excited and pleased for the inauguration or possible issuance,” Araki said. 

Araki mentioned the good relationship between Japan Prime Minister Shinzo Abe and President Rodrigo Duterte as a positive factor in winning investors for the Samurai bond issue. 

Araki said MUFG, among the leading institutions when it comes to project financing, wanted to get involved in the Philippines’ ‘Build, Build, Build’ program, Araki said.  He said, “infrastructure development is a key for the future success of the Philippines.”

Dominguez said the Philippines would like to maintain the tight spreads for its offshore bond issuances, pointing out that when the government issued $2 billion-worth of 10-year dollar-denominated bonds in January, its spread was 37.8 basis points over the US Treasuries, while its maiden ‘Panda’ bond float of 1.46 billion renminbi in China in March had an even tighter spread of only 35 bps over the benchmark. 

“We are now confident that our infrastructure program has enough capital for it. We are not going to be relying solely on debt to finance it,” Dominguez said. 

Topics: Japanese banks , ‘Samurai’ bonds , Mitsubishi UFJ Financial Group , Nomura Holdings Inc. , Mizuho Bank Ltd. , Sumitomo Mitsui Banking Corp. , Daiwa Securities Group Inc. , Finance Secretary Carlos Dominguez III
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