PDEx lists 1st onshore $ bond issued by Phl gov’t

MANILA, Philippines - The Philippine Dealing and Exchange Corp. (PDEx) listed yesterday the first onshore dollar bond issuance by the Philippine government.

During the listing ceremony, Vicente B. Castillo, PDEx chairman and CEO, said the landmark issuance signals the partnership between the government and private investors.

“We witness again the fruit of a partnership of stakeholders in our nation’s debt capital market – market participants, your infrastructure and market operator, and the national issuer – the issuance and listing of a milestone sovereign issue – the $500-million onshore dollar bonds,” he said.

Castillo said this exercise may also trigger more of this kind of issuance in the future.

“This issue brings us many firsts in our market’s history.  This issue was auctioned in the primary market, which showed spectacular demand, to the tune of $1.7 billion in demand at the auction – more than three times its issue size,” he said.

He likewise took note of the participation of the private sector in the issue.

“We saw the local players take an active role in forging a structure everyone best believes can be a milestone in foreign currency denominated fixed income securities that will trade and settle equivalent to a sovereign Republic of the Philippines,” he said.

He noted that this issue was also designed on global terms, under global standards, and was created to mimic the pricing, liquidity and tax features of the Philippine government.

Castillo also welcomed the tax feature incorporated in the dollar bond issuance.

“The entry of this issue into the domestic organized market enables our investor base to access foreign currency bonds in the local market and enjoy the benefits of its tax assumption feature,” he said.

Moreso, he said “this likewise allows our network of brokers and dealers to engage in a new kind of issue and broaden their market expertise to this class of government securities.”

“PDEx is pleased to provide the market venue for this issue, on a unified basis where investors of all tax classes can meet and engage freely in the issue,” he said.

Last month, the Bureau of Treasury issued the $500 million bonds. The 10.5-year bonds fetched a coupon rate of 2.75 percent in yesterday’s Dutch auction where investors tendered a total of $1.742 billion.

Proceeds of the dollar bond sale would be used for various requirements such  as the government’s regular budgetary needs and to re-lend to the Power Sector Assets and Liabilities Management Corp. (PSALM), the agency tasked to manage the government’s power assets.

PSALM needs P60 billion next year to refinance existing debt and to fund budgetary operations.

In January, the Philippines successfully raised $1.5 billion from an issue of 2037 global bonds.

The government had programmed to borrow $4.02 billion from external sources this year, lower than the $4.5 billion last year.