Gov’t raises $2.5B from US dollar bonds
The Philippines has returned to the international bond market with a triple-tranche, $2.5-billion US dollar-denominated bond offering that was issued at a cheaper rate, the Bureau of the Treasury (BTr) said on Thursday.
The new 5.5-year paper fetched a yield of 4.375 percent, 35 basis points (bps) tighter than initial price guidance. Meanwhile, the 10.5-year tranche has a yield of 4.750 percent at 95 bps, 30 bps lower than initially expected, with no extra premium.
Meanwhile, the 25-year sustainability tranche was priced at 5.175 percent, 32.5 bps tighter than the initial price guidance and with a 2.5 bps discount.
The 5.5-year bond has the lowest spread of any similar bond issued by the government since June 2021. Similarly, the yields on the 10.5-year and 25-year bonds are the lowest for such bonds since March 2022, the BTr said.
The foreign bonds received an investment-grade rating from Fitch Ratings, S&P Global Ratings and Moody’s Ratings, thus aligning with the overall credit score earlier awarded to the Philippine government.
Overwhelming interest
Moody’s Ratings assigned the new bonds a senior unsecured rating of “Baa2,” while “BBB” was given by Fitch Ratings. Meanwhile, S&P Global Ratings issued a triple-B rating.
“We are very pleased to see the overwhelming investor interest in our new $2.5 billion triple-tranche global bonds. In fact, compared to our regional peers, the Philippines’ issuance achieved among the best pricing in all of our tranches this year. This is a resounding vote of confidence in our country’s solid credit profile,” Finance Secretary Ralph Recto said in a statement.
The government took advantage of lower benchmark yields, driven by softer inflation data and the US Federal Reserve’s increasingly dovish stance, which led investors to expect rate cuts at the Fed’s September meeting and focus on the potential size of those cuts.
National Treasurer Sharon Almanza said that the strong response and tight pricing of the securities showed that investors still trust in the country’s financial stability and economic health, even amid tough global conditions.
