On January 9, 2023, the Philippines successfully returned to the international capital markets for the first time in 2023 with its USD3 billion triple-tranche 5.5-year, 10.5- year and 25-year SEC-registered Fixed Rate Global Bonds (the “Global Bonds” or the “Notes”).
The 25-year Global Bond was issued under the Republic’s Sustainable Finance Framework, marking the Republic’s fourth G3 ESG bond offering.
This transaction follows the Republic’s USD 2 billion triple- tranche bond offering in October 2022, JPY 70.1 billion four-tranche Samurai bond offering in April 2022 and USD 2.25 billion triple-tranche bond offering in March 2022.
The new 5.5- and 10.5-year tranches were priced at T+105bps and T+145bps with a coupon of 4.625% and 5.00% respectively, 50bps tighter than initial price guidance of T+155bps area and T+195bps area, respectively.
The 25-year Sustainability tranche was priced at 5.50% at par, 45bps tighter than initial price guidance of 5.95% area.
The Global Bonds are expected to be rated Baa2 by Moody’s, BBB+ by Standard & Poor’s, and BBB by Fitch*. The transaction is expected to settle on 17th January 2023.
Despite high volatility in global credit markets amid the rate hike cycle, the Republic took advantage of the improved market sentiments with economic data showing signs of slowing inflation and alleviating concern over Fed tightening.
This opportunistic transaction illustrated the Republic’s ability to navigate a challenging global environment and respond efficiently to capture conducive market conditions. The transaction attracted strong interest across all tranches from a diverse pool of high-quality investors, showcasing investors’ confidence in the Republic’s credit profile.
Finance Secretary Benjamin Diokno stated, “The robust demand for our first international bond offering in 2023 represents a strong vote of confidence by international 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. 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.”
Undersecretary Mark Dennis Joven commented, “As a seasoned issuer in the international bond markets, the Republic has once again received astounding interest across all tranches of the offering. The continued engagement of high-quality global investors has been encouraging as it demonstrates strong confidence for the Republic’s long term growth trajectory and sustainability commitments.”
The Republic’s National Treasurer Rosalia de Leon remarked, “The blockbuster reception and tight pricing achieved in all tranches of our latest offering, despite coming on the heels of curtain-raisers done by other big-name sovereigns, reaffirms the distinction of Philippine credit as favored proposition even in times of uncertainties in the market landscape. It is both a reward for our masterful navigation of the pandemic crisis and a motivation to become a beacon for growth in a period of dimming global prospects.”
The Republic intends to use the proceeds from the sale of the 5.5- and 10.5-year Global Bonds for general purposes of the Republic, including budgetary support.
The proceeds from the 25-year Global Bonds will be applied to general purposes of the Republic, including budgetary support and to finance or refinance assets under the Republic’s Sustainable Finance Framework. Standard Chartered Banks.
BofA Securities, Deutsche Bank, Goldman Sachs, HSBC, Morgan Stanley, Standard Chartered Bank and UBS acted as Joint Bookrunners for the transaction.
*A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time.
(This statement does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or any other jurisdiction in which such an offer would be unlawful, and any securities described in this press release may not be offered or sold in the United States absent registration or an exemption from registration. Any offering of securities by the Republic in the United States would be made by means of a prospectus, which would be obtainable from the Republic or the Joint Bookrunners and would contain detailed information about the Republic, including certain statistical information)
