THE PHILIPPINES has hired banks to arrange investor meetings in Europe to drum up interest in its planned bond issue in euros, according to capital markets publication Refinitiv IFR.
Deutsche Bank and UBS were appointed joint global coordinators and were bookrunners with BNP Paribas, Credit Suisse and Standard Chartered, Refinitiv IFR said.
Investor meetings will be held in Zurich, London, Paris, Frankfurt and Milan from April 26 to promote the bonds.
Fitch Ratings and S&P Global Ratings assigned a “BBB” rating to the planned debt notes, a notch above minimum investment grade, in line with the Philippines’ sovereign credit score.
National Treasurer Rosalia V. De Leon confirmed the planned offering, but only said “benchmark” when asked about the size of the issue. Benchmark offerings are typically at least $500 million in size.
She later on told BusinessWorld that “[d]etails [are] still to be finalized from market feedback.”
The Philippines, one of Asia’s most active sovereign bond issuers, is raising funds to help finance its P3.662-trillion budget this year.
It also plans to raise 6 billion yuan ($893.3 million) this year from issuing so-called “panda” bonds in China, its second of such an offering. Ms. de Leon had said earlier that those notes could be sold “most likely in May” with three-, five- or seven-year tenor.
That would be bigger than the $230 million or 1.46-billion yuan bonds sold by the government last year, marking its first foray into the Chinese capital market. The three-year papers offered in May fetched a five percent coupon.
Manila raised $1.5 billion in 10-year US dollar bonds in January.
The last time the government borrowed euros was in 2010, raising €75 million in three- and five-year multi-currency retail Treasury bonds that also raised $400 million. It also raised €500 million in 10-year debt in 2006 in a multi-currency global bond offer along with $1.5 billion.
“Details will be disclosed after the Philippine Finance team will finalize them after receiving investor feedback during road show,” Finance Secretary Carlos G. Dominguez III said in a mobile phone message on Thursday.
In February, he said in a Bloomberg Television interview that the government was “considering” the sale of euro-denominated bonds in the first half of the year.
“Roughly the first half of the year — that’s when we’re planning. Again it depends on market conditions, but we’re prepared to do something in the first half of the year in those markets,” Mr. Dominguez said, referring to Europe and China.
Apart from the panda bonds, the government is also looking at offering yen-denominated “samurai” bonds amounting to $1-1.5 billion in yen equivalent next semester.
A local bond trader said he expects strong demand for the euro-denominated sovereign bonds.
“The general tone is supportive of emerging markets. The Federal Reserve is dovish and other major central banks as well, even the European Central Bank,” the trader said in a phone interview.
“The tone this year, compared to the past two years, has been better.”
The state plans to borrow P1.189 trillion this year — 75% of which will be sourced domestically while the remainder will be from foreign creditors — to fund a budget deficit programmed at P624.4 trillion, equivalent to 3.2% of gross domestic product, and support increased government spending programmed at P3.774 trillion. — Reuters and Karl Angelo N. Vidal