THE Philippine government is set to return to the global bond market, announcing on Monday its plan to issue multi-tenor dollar-denominated bonds.
According to data from the Bloomberg Terminal, the papers to be offered will be 10-year and 25-year dollar-denominated senior unsecured bonds.
National Treasurer Rosalia V. de Leon declined to provide further details.
The proceeds of the fundraising activity will be used for general purposes and budgetary support, according to Bloomberg.
The bond issue has set a price guidance at “CT10+220 basis points (bp) area” for 10-year tenor, with CT10 referring to 10-year US Treasury bonds, and “3.375% area” for the 25-year notes. The notes will also carry semi-annual fixed interest rates.
Bloomberg said the volume of the offer for the two tenors will depend on the US benchmark size.
The benchmark size for Philippine global bond sales based on previous issuances ranges between $500 million and $700 million.
Debt watcher S&P Global Ratings on Monday assigned a “BBB+” long-term foreign currency issue rating to the proposed dollar-denominated notes.
“The notes represent direct, general, unconditional, unsecured, and unsubordinated obligations of the sovereign, and rank equally with the sovereign’s other unsecured and unsubordinated debt obligations,” S&P said in a statement yesterday.
The joint bookrunners for the transaction include Citigroup, Inc., Credit Suisse Group AG, Goldman Sachs (Asia) L.L.C./ Morgan Stanley, Standard Chartered Bank and UBS Group AG, according to Bloomberg.
The government’s initial borrowing plan was set at P1.4 billion with a borrowing mix of 75:25, in favor of domestic sources, but Ms. De Leon said earlier this month that the revised mix could now range between 70:30 and 72:28.
The Development Budget Coordination Committee is currently reviewing its macroeconomic assumptions in light of the ongoing pandemic.
Ms. De Leon earlier postponed the government’s plan to tap the panda or yuan bond market amid the coronavirus pandemic.
In January, the government raised €1.2 billion out of bids worth €4.3 billion from its offer of two tenors of euro-denominated bonds, broken down into €600 million each for three-year and nine-year papers.
The bonds carry coupon rates of 0.1% for the three-year bonds and 0.7% for the nine-year papers, a spread of 40 bps and 70 bps over benchmark rates, respectively.
Meanwhile, the Treasury sold $1.5 billion in 10-year dollar-denominated global bonds in January 2019 priced 110 bps above benchmark rates. The offer was met with strong demand, with total bids reaching $4 billion.
In May last year, the government also raised 2.5 billion renminbi (RMB) or $363.3 million via three-year panda bonds at a coupon of 3.58%. The offer was met with strong demand with total bids reaching RMB11.25 billion.
The Treasury also issued ¥92 billion ($860 million) following a multi-tenor offer of yen-denominated bonds in August last year. Broken down, ¥30.4 billion was raised via three-year samurai bonds at a coupon rate of 0.18%, ¥21 billion from five-year papers priced at 0.28%, ¥17.9-billion from seven-year securities at a 0.43% coupon, and ¥22.7 billion through 10-year bonds priced at 0.59%. — B.M. Laforga