The Marcos administration successfully completed its second offshore commercial borrowing, raising $2.5 billion, the Department of Finance (DOF) announced.
In a statement on Thursday, Aug. 29, the DOF reported that Manila sold notes maturing in 5.5 years and 10.5 years, along with 25-year debt papers classified as sustainable.
The new 5.5-year bond has a yield of 4.375 percent, which is 35 basis points better than expected. The 10.5-year bond yields 4.750 percent, improving by 30 basis points from the initial estimate.
The 25-year Sustainability bond is set at a yield of 5.17 percent at par, 32.5 basis points better than initially suggested.
The DOF stated that the country capitalized on declining benchmark yields, driven by softer inflation data and increasingly dovish remarks from the US Federal Reserve, which boosted investor confidence in expected rate cuts.
Finance Secretary Ralph G. Recto said that the government was "very pleased" with the strong investor interest in its new $2.5 billion triple-tranche global bonds.
“Compared to our regional peers, the Philippines’ issuance achieved among the best pricing in all of our tranches this year. This is a resounding vote of confidence in our country’s solid credit profile,” Recto said in a statement.
“More importantly, this is a significant win for every Filipino as we are raising funds at very affordable costs to support programs and projects that will boost economic growth, create quality jobs, increase incomes, and reduce poverty,” he added.
National Treasurer Sharon P. Almanza, meanwhile, noted that the positive reception and tight pricing of the borrowings demonstrated strong investor confidence in the country's creditworthiness and strong economic performance, even in a challenging global environment.
“The exceptionally tight pricing across all offerings enables the government to conserve on interest payments, thereby allowing more fiscal space to flow into transformative investments,” Almanza said.
“Thus, the favorable outcome of the transaction further strengthens the Philippine Government's position to fulfill its commitments to fiscal consolidation and rapid economic growth,” she added.
The proceeds from the bonds are intended for general purposes including budgetary support of the Marcos administration.
In May, the government successfully raised $2 billion from international capital markets by issuing dual-tranche debt securities.
The 10-year bonds, set to mature in 2034, were priced at US Treasuries plus 80 basis points, representing a 40 basis point tightening from the initial price guidance.
On the other hand, the 25-year sustainability bonds, maturing in 2049, were priced around 5.60 percent, indicating a 45 basis point improvement from the initial guidance of 6.05 percent.
In the first half of the year, the government's foreign borrowings decreased by 27 percent from P366.44 billion to P267.4 billion.
The largest portion of external funding came from global bond sales, raising P115.25 billion, followed by program loans of P100.5 billion and project loans totaling P51.67 billion from the country's development partners.
In contrast, borrowings from domestic creditors rose by 27 percent to P1.303 trillion by the end of June from P1.024 trillion in the same period last year.
The majority of these domestic borrowings were in the form of fixed-rate treasury bonds, with the government issuing P609.21 billion in long-term IOUs.
Furthermore, in February, the government acquired P584.86 billion from small Filipino investors through the sale of retail treasury bonds. In addition, it obtained another P109.07 billion through regular treasury bill auctions in the first half of the year.
By the end of June, the government's gross borrowings accounted for 61 percent of the Marcos administration's full-year 2024 borrowing program, which totals P2.57 trillion.