Government raises $2 billion from bond sale

MANILA, Philippines — The Philippines managed to secure $2 billion from the international debt market via a dual-tranche global bond issuance aimed at financing the country’s budgetary requirements.

The government raised $2 billion or about P115 billion from this year’s first foray into offshore commercial borrowing through the issuance of dual-tranche dollar and sustainability bonds.

The government borrowed $1 billion for its 10-year tenor with a coupon of 5.25 percent.

Its 25-year sustainability bond, on the other hand, fetched an average rate of 5.6 percent and raised another $1 billion.

The Marcos administration last issued dollar bonds in January 2023 when it raised $3 billion amid easing global interest rates.

At the time, coupon rates were slightly lower at five percent for the 10-year tenor and 5.5 percent for the 25-year offer.

The $2-billion issuance forms part of the target $5 billion to be raised for the entire year.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the benchmark US Treasury yields already corrected lower from the highs the past week, allowing the government to slightly reduce borrowing costs for the issuance.

“It also reflects increased confidence of global investors on the government’s credit fundamentals and also to effectively lengthen its foreign debt maturities and better manage forex risks,” Ricafort said.

ING Bank senior economist Nicholas Mapa said the issuance was a good opportunity for the government given recent global developments.

“Although there is some speculation we will see rates cut toward the end of the year, things remain uncertain,” Mapa said.

The government intends to use the proceeds from the sale of the 10-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 secured a rating of Baa2 from Moody’s, BBB+ from S&P Global Ratings and BBB rating from Fitch.

The transactions are scheduled to be settled next week, May 14.

Bank of America, Citigroup Inc., HSBC, JP Morgan, Morgan Stanley, Standard Chartered and UBS acted as joint bookrunners for the issuance.