Government ups Eurobond offer to $450-M

The government’s Eurobond offering has been increased to 500 million Euros or about $450 million from the original offering of $250 million as investors lapped up the strongly-received bond float of the Arroyo administration.

Finance officials said the offering was actually oversubscribed by as much as 800 million Euros but the Philippine government accepted only 500 million Euros.

Of the total issuance, about 60 percent was snagged by European investors, while about 20 percent each were distributed to Asian and American investors.

Finance officials said the Philippine government got a good deal, fetching a coupon rate of 9.375 percent and getting a spread of 525 basis points over German bonds of five years.

"The oversubscription is a strong indication of confidence that investors have over the government’s ability to raise its medium and long-term borrowing requirements. This confidence is manifested in the reduced pricing and the increased size of the borrowing," Finance Secretary Jose Isidro Camacho said.

The finance department conducted earlier this month a roadshow in key cities in the European Community. Earlier, the first leg of the roadshow included Milan in Italy, Frankfurt in Germany, Armsterdam in The Netherlands and London in England.

The DOF named Deutsche Bank, Salomon Smith Barney and UBS Warburg as joint lead managers for the minimum $250 million worth Eurobands government issued to raise funds for debt-saddled National Power Corp. (Napocor). Bond proceeds will partially cover Napocor’s $530 million funding requirements for this year.

Energy Secretary Vicente Perez said the borrowing puts to bed the state-run power firm’s financing requirements for the year and prepares government for its upcoming privatization.

"Napocor got a good deal for the transaction since it would have gotten a higher rate had it gone directly to the market," Perez said.

Camacho said government decided to borrow for Napocor to keep the borrowing costs down. Had Napocor done the borrowing on its own, Camacho said the spreads would have been higher by about 50 basis points.