Investors swamp PH’s eurobond issue

By Chino S. Leyco

Despite the Philippines’ lower-than-expected economic growth in the first-quarter, investors still swamped the national government’s return to the euro-debt markets after Manila’s more than a decade hiatus, the Bureau of the Treasury said.

National Treasurer Rosalia de Leon  (BLOOMBERG / MANILA BULLETIN) National Treasurer Rosalia de Leon

National Treasurer Rosalia V. De Leon said yesterday that the national government raised €750 million equivalent to roughly (P44 billion) and ($842.33 million), from the sale of eight-year euro-denominated bonds, which fetched a coupon rate of 0.875 percent.

“There was good reception from high quality and real money investors especially from Europe despite lower than expected GDP figures and ongoing tensions between US and China,” De Leon said in her report submitted to Finance Secretary Carlos G. Dominguez III.

According to De Leon, total demand for the eurobond amounted to almost €3 billion, ($3.368 billion) which is six times oversubscribed from the government’s original offer of only benchmark-sized €500 million ($561 million).

Following the strong demand, the treasurer said “we then decided to upsize the transaction to €750 million ($842.33 million).”
The yield of Manila’s 2027 eurobond was at 70 basis points over benchmark, De Leon said.

“Furthermore, the yield that we achieved is tighter by 70 basis points to 75 basis points against higher and/or similarly rated peers,” De Leon said. “It is also noteworthy that the spread over benchmark when we last issued in the euro market was 294 basis points.”

The euro borrowing exercise comes just days after Standard & Poor’s raised the Philippines’ credit rating to “BBB+,” from “BBB,” with a stable outlook, the highest the country has achieved.

Deutsche Bank and UBS have been hired as joint global coordinators. They are also joint bookrunners with BNP Paribas, Credit Suisse and Standard Chartered.
The issue is the first the Philippines is doing in euros since 2006.

The Philippines, one of Asia’s most active sovereign bond issuers, is raising funds to help finance its P3.7 trillion ($70.90 billion) budget this year.
The fund-raising program includes six billion yuan ($879.4 million) from a planned second offering of panda bonds in China. (With Reuters report)