MANILA, Philippines — The Philippines raised $3 billion from the international debt market through the issuance of triple-tranche global bonds, taking advantage of high demand and easing global interest rates to finance the country’s budgetary requirements.
The Bureau of the Treasury (BTr) said the government raised $3 billion (P164 billion) in its second foray into offshore commercial borrowing through the issuance of triple-tranche dollar and green bonds.
The government raised $500 million from the issuance of 5.5-year tenor bonds with a coupon rate of 4.743 percent while $1.25 billion was raised from the issuance of bonds with maturity of 10.5 years and a rate of five percent.
Its 25-year sustainability bond fetched an average of 5.5 percent and raised another $1.25 billion.
Three months ago, the administration made its debut in the foreign debt market, but only raised $2 billion after it was hit by high interest rates that ranged from five to six percent.
Overall demand was also higher this time around as the order book peaked at around $28.2 billion for all tranches, upsizing the transaction from an initial target issue of just $2 billion.
The Treasury said the country took advantage of improved market sentiment as inflation is expected to cool down and concerns about the US Federal Reserve tightening have eased up.
National treasurer Rosalia de Leon said the latest bond sale showed that the Philippines has the ability to navigate a challenging global environment and respond to capture conducive market conditions.
“The blockbuster reception and tight pricing achieved in all tranches of our latest offering, despite coming on the heels of curtain-raisers done by other big-name sovereigns, reaffirms the distinction of Philippine credit as a favored proposition even in times of uncertainties in the market landscape,” De Leon said.
Union Bank of the Philippines chief economist Ruben Carlo Asuncion said the lower rates were a result of recent economic developments that doused expectations of more monetary policy tightening.
ING Bank senior economist Nicholas Mapa said global interest rates are expected to edge lower in the coming months with the market expecting a Fed pivot. In turn, local yields are also expected to decline.
“It seems the appetite for Philippine sovereign debts is doing well with these results. I think that, in general, emerging economies this year are in better shape compared to advanced economies once 2023 is done,” Asuncion said.
“There was strong demand for the paper given the credit rating and with rates expected to slide further,” Mapa said.
Finance Secretary Benjamin Diokno, for his part, said the robust demand for the first international bond offering of 2023 represents a strong vote of confidence by foreign investors.
Diokno said the Philippines continues to have sound economic fundamentals even in the face of volatile global financial markets.
The government intends to use the proceeds from the sale of the 5.5- and 10.5-year global bonds for general purposes, including budgetary support.
On the other hand, the proceeds from the 25-year green bonds will also be applied to general purposes and to finance or refinance assets under the country’s sustainable finance framework.
The latest global bonds are expected to secure ratings of Baa2 from Moody’s, BBB+ from S&P Global Ratings and BBB from Fitch.
The transactions are scheduled to be settled on Jan. 17.
A Securities Inc., Goldman Sachs, HSBC, Morgan Stanley, Standard Chartered Bank, UBS Group AG and Deutsche Bank AG acted as joint bookrunners for the issuance.