Government borrows P29-B from Japanese investors via bonds sale

MANILA, Philippines — The Duterte administration borrowed ¥70.1 billion (P29 billion) from Japanese investors following the sale of sustainability bonds, the Philippines’ first such offering in the Samurai debt market.

The Samurai bond offer was divided into four tranches, with debt papers payable in five, seven, ten and 20 years, the Bureau of the Treasury said in a statement on Wednesday.

The Treasury said there was strong demand from Japanese investors for the Samurai bonds, which allowed the government to accept more orders and increase the size of its offering from the original $70 billion.

Interest charged on the bonds, as measured by a coupon rate, stood at 0.76% and 0.95% for the 5-year and 7-year notes, respectively. Meanwhile, the longer-dated 10-year and 20-year bonds fetched coupon rates of 1.22% and 1.83%, respectively.

“The upsized transaction supported by new investors from Japanese regional banks and life insurance companies highlights the Republic’s strong credit profile in the global capital markets,” National Treasurer Rosalia De Leon said.

The Samurai bonds have an Environmental, Social, and Governance (ESG) label across all four tranches, the first of its kind for the Philippine government. Just last month, the government raised $2.25 billion following its first triple-tranche global bond sale that included a maiden green bond offer.

Proceeds from the bond offer will add to the government’s growing debt pile that already crossed the P12-trillion mark. Figures from the Budget department showed the Duterte administration is planning to borrow P3 trillion from onshore and offshore creditors in 2022 to bridge its budget deficit. — Ian Nicolas Cigaral

1 JPY = PHP 0.41