The Philippine government has completed its largest euro borrowing in history, raising about P122.43 billion to support the Duterte administration’s spending program, including the coronavirus response.
The Bureau of the Treasury announced on Thursday, (April 22), that the national government raised 2.1 billion euros, or $2.5 billion, through sale of global bonds in the European debt market.
The latest commercial borrowing consists of 650 million euro worth of four-year bonds, 650 million euro worth of 12-year bonds, and 800 million euro worth of 20-year bonds.
In a statement, National Treasurer Rosalia de Leon said this euro issuance marked the fourth offering since the pandemic, and second for the year following last month’s $500-million bond sale in the Japanese debt market.
To date, the Philippines borrowed a total of $3 billion from the offshore debt markets, utilizing more than half of its overseas commercial financing program worth $5.5 billion for 2021.
The new four-year bonds fetched a coupon rate 0.250 percent, while the 12-year notes were priced at 1.2 percent. Lastly, the 20-year debt papers carried a coupon of 1.75 percent.
De Leon said all three tenors tightened by 25 basis points from the initial price guidance and were also oversubscribed with total offers drawing around 6.5 billion euro.
“[This] serves as affirmation that we are on track to emerge from this crisis as a stronger and more resilient economy,” de Leon said.
“Further, the ability to stretch our maturities to the 20-year tenor at tight pricing underscores that investors are indeed taking a long view on our return prospects,” she added.
Finance Undersecretary Mark Dennis Joven said the Philippine government received robust demand from European investors as well as new participants including the United Arab Emirates central bank.
Meanwile, Finance Secretary Carlos G. Dominguez said the country’s successful return to the international capital market reflects the investor community’s confidence in the Philippines’ prospects for a strong recovery from the prolonged pandemic. Dominguez said the government’s “financial readiness” allowed the its to do whatever COVID-19 response measures are necessary to save lives and revive the economy.”
“Investors apparently believe we have what it takes to ride out the COVID-19 crisis on the strength of the fiscal discipline that has been maintained and the tax measures plus other reforms that have been carried out by the government,” the finance chief said.