PH raises P24-billion from samurai bonds

Published March 30, 2021, 4:49 PM

by Chino S. Leyco

The Duterte administration has successfully returned to the Japanese debt market, raising about P24.2 billion to fund the government’s coronavirus response and support the country’s economic recovery plan.

The Bureau of the Treasury announced on Tuesday, March 30, that the national government raised 55 billion yen from a three-year Samurai bond offering, which is also the government’s first commercial borrowing deal in the offshore market in 2021.

National Treasurer Rosalia De Leon

“This landmark transaction highlights the government’s capability to respond to challenging times with creative solutions to free up fiscal space to augment the national government’s COVID-19 response,” National Treasurer Rosalia de Leon said.

According to the treasury bureau, the yen-denominated issuance is a discount bond, noting that “this transaction marked the first-ever zero-coupon bond transaction issued in the Samurai bond market.”

The new Samurai tranche was priced at 21 basis points above the benchmark, the tightest spread the Philippines has achieved so far since its return to the market back in 2018. 

Initial target size was around 30 billion yen but was upsized to 55 billion year due to strong investor demand, the treasury bureau said in a statement.

Meanwhile, Finance Secretary Carlos G. Dominguez III said the Philippines’ successful return to the Japanese bond market at this precarious time underlines the continued investor confidence in the country’s economy.

Dominguez said the strong investor confidence was brought about by the government’s strong fiscal position and prudent management that augurs well for a robust and sustainable recovery from the economic turmoil brought by the COVID-19 pandemic.

“This bond offering brings to light the government’s relentless drive to generate sufficient resources to fund its COVID-19 response and other priority programs that are meant to return the country soon enough to the path of high and inclusive growth,” Dominguez said.

Finance Undersecretary Mark Dennis Joven, meanwhile, said the issuance shows the country’s preparedness to expand its funding sources and the continued confidence and support of its credit investor base. SMBC Nikko Securities Inc. acted as sole Lead Manager and Book Runner for this deal.