Over $3-B raised from sale of dual-currency bonds

The Philippines successfully raised a total of USD3.29 billion from the sale of US dollar and euro-denominated bonds, the Bureau of the Treasury (BTr) announced on Friday.

The bond issuance included USD2.25 billion in 10-year and 25-year US dollar bonds and €1 billion (USD1.04 billion) in a 7-year euro bond. Both the 25-year dollar bond and the 7-year euro bond are issued under the country’s Sustainable Finance Framework.

“This marks the Republic’s first-ever EUR sustainability bond and also marks the Republic’s return to EUR bond markets since April 2021,” the BTr said.

The 10-year dollar bond was priced at T+90 basis points, improving by 30 basis points from its initial price guidance of T+120 basis points, while the 25-year dollar sustainability bond was set at 5.9 percent, down from the earlier estimated 6.1 percent. The 7-year euro bond was priced at mid-swaps plus 125 basis points, which was a 35-basis-point tightening from the initial guidance of mid-swaps plus 160 basis points.

“Despite the volatility in markets, the success of the offering demonstrated the Republic’s ability to efficiently capture conducive market conditions and launch a jumbo dual-currency transaction. The transaction had also attracted robust demand and the strong orderbook momentum carried across USD and EUR markets, with interest from a diverse pool of high-quality global accounts, showcasing investors’ confidence in the Republic’s credit profile and long-term outlook,” the BTr stated.

The transaction is expected to settle on February 4.

Leading credit agencies have assigned positive ratings to the dollar bonds, with S&P Global Ratings awarding a “BBB+” rating and Fitch Ratings giving both the dollar and euro bonds a “BBB” rating, reflecting good credit quality.

The proceeds from the bond issuance will be used to fund general budget requirements and projects that align with the Philippines’ sustainability goals.

National Treasurer Sharon Almanza noted, “With a constructive market developing over the week, we see an opportune window for the Republic to re-enter the capital markets. Our goal is to capitalize on the current market momentum to secure the most efficient cost dynamics ahead of potential uncertainties in the near future. We look forward to the continued support of our valued investors.”

Finance Secretary Ralph Recto highlighted the investor confidence reflected in the offering’s success. “The success of this offering underscores our ability to seize favorable market conditions efficiently. This is a reflection of the trust and confidence of investors in the leadership and policies of the Marcos Jr. administration, as recognized by the market and further reinforced by the country’s improving credit rating trajectory,” he said.

Recto also emphasized the administration’s commitment to fostering stronger investor relations, pointing to the government’s frequent engagements, particularly during the World Economic Forum (WEF) in Switzerland earlier this year.

“We have constantly communicated our strategies to achieve robust socioeconomic development for the country, and hence, we are confident that our investors will remain receptive to the Philippine growth story,” Recto added.

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