The Philippines offered yesterday $500 million in sovereign bonds to global investors, taking advantage of a recent outlook upgrade from US-based Moody’s Investors Service.
Finance Undersecretary and National Treasurer Roberto Tan announced the offering yesterday as he expressed optimism on investors’ healthy appetite for Philippine debt papers.
The government made the offering by reopening its existing 2032 bonds, with Credit Suisse and Deutsche Bank handling the bond sale.
The issue is only the third dollar bond deal this year from an Asian government after widespread risk aversion led to a surge in credit spreads.
“The news on the country’s credit is helping in terms of putting investor focus,” Tan told reporters.
Last week, Moody’s raised its outlook on the country’s key ratings to ‘positive’ from ‘stable,’ citing progress in government efforts to stabilize public sector finances.
The move came as a surprise as Moody’s is the considered most pessimistic among ratings agencies assessing the country’s credit standing.
The affected ratings include the B1 long-term government foreign- and local-currency ratings, the B1 foreign-currency bank deposit ceiling and Ba3 foreign currency country ceiling.
Moody’s B1 rating is four notches below investment grade. It is one notch below Standard & Poor’s B-rating and two notches below Fitch Ratings BB grade.
Officials of the rating firm said that an actual upgrade in ratings will require more fiscal consolidation.
Tan said proceeds of the issuance would be used to refinance the country’s maturing debts.
“We will also be buying some foreign currency to settle our maturing obligations,” Tan told reporters.
The $500 million issuance completes the government’s programmed commercial borrowing for 2008.
The offer would raise the total size of the 2032 sovereign bonds to $1.5 billion, the government said.
The National Government had planned to wait until the second quarter to tap the international debt market but analysts said that Moody’s recent improvement on the country’s credit outlook encouraged the government to push through with the issuance.