RP completes bond issues this year

The government has completed this year’s foreign commercial borrowing program with the issue of a $1-billion sovereign bond.

The Department of Finance (DOF) announced yesterday that its 25-year global bond offering carried a coupon rate of 6.375 percent and was priced at 97.862 percent to yield 6.55 percent.

The pricing of the bond due January 2032 was concluded in New York at around 1 a.m., Manila time, with the price equivalent to 180.3 basis points over benchmark US treasury due 2,032.

Finance Secretary Margarito B. Teves said the offer was the first international bond offer for the country and the first for any sovereign in 2007.

"The government is once again pleased with the local and foreign investor reception and looks forward to continuing this partnership over the long term," Teves said.

The Philippines is Asia’s second-largest sovereign debt issuer after Japan.

Teves said the National Government has mandated Citigroup, Credit Suisse and Deutsche Bank as lead underwriters for the issue.

National Treasurer Omar Cruz said the country was able to capitalize on favorable market conditions to complete the government’s commercial external funding program for the year.

Shortly after the pricing exercise, Standard & Poors Investor Services said it had assigned its ‘BB-’ senior unsecured debt rating to the Republic of Philippines’ (foreign currency BB-/Stable/B, local currency BB+/Stable/B) proposed $1-billion global bond issue.

"The ratings and stable outlook on the Philippines reflect better prospects for policy continuity and fiscal consolidation after last year’s full implementation of the expanded VAT law, along with a stabilizing political backdrop," said Standard & Poor’s credit analyst Agost Benard.

The Bureau of Treasury (BTr) earlier said the National Government plans to borrow $2.466 billion from foreign creditors this year, of which $1 billion would be in commercial borrowing and $1.466 billion in official development assistance.