By Francis Allan L. Angelo
The Republic of the Philippines has successfully raised $2.5 billion through a triple-tranche global bond offering, marking its second return to the international capital markets in 2024.
The bond issuance includes 5.5-year, 10.5-year, and 25-year fixed-rate global bonds, with the 25-year bond issued under the Republic’s Sustainable Finance Framework, emphasizing its commitment to environmental, social, and governance (ESG) standards.
“We are very pleased to see the overwhelming investor interest in our new USD 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,” Finance Secretary Ralph G. Recto said in a press statement
The new 5.5-year tranche was priced at a yield of 4.375%, while the 10.5-year and 25-year tranches were priced at 4.750% and 5.175% respectively.
The pricing achieved is notable for being the tightest among similar issuances since March 2022, showcasing strong investor confidence in the Philippines’ creditworthiness and economic stability.
National Treasurer Sharon P. Almanza highlighted the significance of the transaction on the country’s creditworthiness and economic position.
“The positive reception and tight pricing of our new securities reflect continued investor confidence in the country’s creditworthiness and robust economic performance, even amidst 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.
The proceeds from the 5.5-year and 10.5-year bonds will be used for general budget financing, while the funds raised from the 25-year bond will support both general budget financing and projects aligned with the Republic’s Sustainable Finance Framework.
The Republic capitalized on favorable market conditions, with investor interest fueled by softer inflation data and expectations of upcoming rate cuts by the U.S. Federal Reserve.
The transaction was well-received globally, drawing interest from a diverse pool of high-quality investors, further solidifying the Philippines’ standing in the international bond market.
HSBC, Standard Chartered Bank, and UBS acted as Joint Sustainability Structuring Banks, with BNP Paribas, Citigroup, Goldman Sachs, J.P. Morgan, Morgan Stanley, and others serving as Joint Bookrunners for the transaction.
The bonds are expected to settle on September 5, 2024, and are anticipated to be rated Baa2 by Moody’s, BBB+ by Standard & Poor’s, and BBB by Fitch.
