Investors swamped the Marcos administration’s second overseas $3-billion bond sale, allowing the government to borrow at the much lower interest rates than initially estimated, the Department of Finance (DOF) said.
Finance Secretary Benjamin E. Diokno announced Tuesday, Jan. 10, that the national government successfully completed its triple-tranche global bond sale, raising $3 billion or P164.9 billion.
This new debt offering was the second under President Marcos’ watch after his maiden $2 billion commercial borrowing in October 2022.
Diokno said Manila upsized its bond offering from only $2 billion due to strong investor interest with demand peaking at around $28.2 billion for tranches 5.5-years, 10.5-years and 25-years.
Broken down, the government sold $500 million worth of 5.5-year bonds at 4.743 percent, $1.25 billion of 10.5-year bonds at 5.001 percent, and $1.25 billion of 25-year "sustainability" bonds at 5.50 percent.
“With the investor demand, we were able to reduce the new issue premium to -5 basis points from initial indications of 25 basis points to 35 basis points,” the DOF chief said .
Diokno added that the robust demand for the country’s first international bond offering in 2023 represents a strong vote of confidence by foreign investors.
“It is a testament to the Republic’s sound economic fundamentals and the resilience of our economy in the face of volatile global financial markets,” Diokno said.
“We are pleased to see international investors’ recognition of the Philippines’ strong economic recovery, sound fiscal policies, and sensible socioeconomic agenda to promote sustainable and inclusive economic growth,” he added.
In 2023, the Marcos administration plans to borrow P2.207 trillion from domestic and foreign creditors. This is slightly lower compared with P2.212 trillion revised program for last year.
Most of the government’s financing for this year would come from local sources, accounting for 75 percent of the total.
“The outcome represents an overwhelming investors’ vote of confidence on the economic managers’ astute economic stewardship,” Diokno said.
BofA Securities, Deutsche Bank, Goldman Sachs, HSBC, Morgan Stanley, Standard Chartered Bank and UBS were tapped as joint lead managers and joint bookrunners.
As of November 2022, the outstanding debt of the national government stood at P13.644 trillion, up by a marginal 0.02 percent from P13.641 trillion in October.
Domestic debt amounted to P9.43 trillion, P72.73 billion or 0.78 percent higher compared to the end-October 2022 level.
Meanwhile, external debt amounted to P4.22 trillion, P69.58 billion or 1.62 percent lower than the end-October 2022 level due to the P106.98 billion impact of local currency appreciation and P13.38 billion net repayment.