The Market Monitor Minding the Nation's Business
The Bureau of the Treasury’s liability-management deal, jointly managed by the state-owned Development Bank of the Philippines (DBP) and other banks, was awarded the deal of the year prize at the Investment House Association of the Philippines (IHAP) Awards 2016. The Philippines closed on Sept. 9, 2015, this domestic liability-management transaction.
The DBP was one of eight mandated joint-deal managers (JDMs), yet delivered more than its share to the success of the transaction. The DBP brought in 27.51 percent of total submissions for the exchange of eligible bonds and 16.32 percent of total submission for new subscription, considering that there were eight JDMs appointed for the transaction.
The quality of the offers were further demonstrated when no less than 20.8 percent of the final offers accepted came from those coursed through the DBP. The transaction saw a tremendous response from the market, with total tenders of eligible bonds amounting to P388 billion, representing an oversubscription of at least 3.88 times for the total transaction.
The strong response also allowed the government to price the new bonds at the minimum coupon rates it had earlier set. In a press statement, Finance Secretary Cesar V. Purisima said: “The transaction has helped the Republic achieve its debt-management objectives, while also providing investors with new benchmark bonds in exchange for illiquid bonds.”
“With the introduction of two tranches of exit bonds this year, the Republic showed that it will continue to provide innovative solutions in line with investors’ needs,” he added.
National Treasurer Roberto B. Tan said that “we are very pleased with the overwhelming response of the market and the continued support from investors. The result, achieved amid significant volatility in broader emerging markets, is further testament to the strong economic fundamentals of the Philippines.”
With the backdrop of possible rising interest rates, the Philippines required a very tight timeline of just five weeks from the mandate award to closing. Needless to say, this required the deal team (composed of a cross-section from the DBP’s Capital Markets, Treasury Marketing, ALM, Fixed-Income Trading and Correspondent Banking teams within the DBP’s Financial Resource Sector as ably supported by the DBP’s Legal Services Group) to work beyond regular hours to ensure that this tight timeline and the client’s requirements were met.
The successful conclusion of the transaction is testament to the best practices of the DBP’s employees: dedication, teamwork and client centricity to ensure that the task is done and done well.
The DBP also recently released its sixth Sustainable Development Report documenting the bank’s performance using the Global Reporting Initiative (GRI) framework. Called “Measures of Progress: Beyond Numbers, Beyond Banking,” the report showcases the DBP’s sustainable development agenda and presents recent and ongoing initiatives to deliver much-needed funding in line with the bank’s development thrusts.
The report discloses key financial and sustainability information wherein the bank’s products and services have made a great impact on countryside development, infrastructure development, social development, and small and medium enterprises. The report is a milestone for the DBP, because of the transition from the old GRI G3 standards in sustainability reporting to the latest GRI G4 guidelines, released in May 2013, which require a meticulous systematic approach of materiality review and identification of new set of materiality aspects, i.e. impact metrics which were not initially measured in previous sustainable reports.