PHL returns to ‘samurai’ bond market

THE PHILIPPINES has launched an offer of yen-denominated “samurai” bonds from which it plans to raise about $750 million, National Treasurer Rosalia V. De Leon told reporters on Tuesday.

Sale of the new debt papers — with tenors of three, five, seven and 10 years — is meant for “diversification” of the country’s credit sources, Ms. De Leon said.

“Official marketing starts today, so we still have to see in terms of the whole results of the first day marketing,” Ms. De Leon told reporters following the Bureau of the Treasury’s (BTr) bond auction yesterday.

“Baka within the week, we’ll already price. Hopefully, depending on the results,” she added.

“We are still looking at up to $750 million, and if there would still be some room to adjust, then we can go as high as $1 billion,” the national treasurer said, while noting that “for now, we are just looking at $750 million.”

DEMAND HIGH
She said that the government “added the seven-year tenor” since, “based on the soft sounding, there seems to be interest on that pocket…”

“One of the factors that keep… ROPs (Republic of the Philippines bonds) very tight is because of… scarcity value,” she said, explaining: “We don’t really offer as much in the market given that we have a menu of options, not only coming from the international debt market but also we have [other] funding sources and access to multilateral institutions and even bilaterals.”

The Treasury tapped Mizuho Bank Ltd., The Daiwa Bank Ltd., Nomura, Sumitomo Mitsui Banking Corp. and the Mitsubishi UFJ Group to serve as the transaction’s bookrunners.

In August 2018, the Philippines sold $1.39 billion (¥154.2 billion) worth of “samurai” debt papers in three-, five- and 10-year tenors, fetching 0.38%, 0.54% and 0.99% coupons, respectively.

The Philippines, one of Asia’s most active sovereign bond issuers, plans to borrow P1.189 trillion this year. Documents from the latest Development Budget Coordination Committee meeting show that 73% of total borrowings will be sourced domestically while the balance will be from foreign creditors.

This will be used to fund a budget deficit programmed at P624.4 billion, equivalent to 3.2% of gross domestic product, and support increased government spending programmed at P3.774 trillion.

The government returned to offshore market twice in May, raising €750 million ($842.33 million) in eight-year global bonds, as well as 2.5 billion renminbi ($363.3 million) in three-year “panda” bonds.

In January, the Philippines also sold $1.5 billion in 10-year offshore dollar bonds.

Ms. De Leon said the Treasury plans to issue the samurai bonds before Aug. 8, ahead of the Aug. 13-15 Obon Festival which in Japan is a holiday.

“Actually that’s out target. We have to avoid what we call Obon” since offices are closed in those three days, according to Ms. De Leon. — Karl Angelo N. Vidal