Government to regularly issue peso global bonds, says Purisima

MANILA, Philippines - The government will regularly issue peso-denominated bonds in the global debt market following the success of its maiden issue of 10-year local currency global bonds last Thursday, Finance Secretary Cesar Purisima said during the weekend.

 “This will be part of our regular program,” Purisima said.

He said that following the success of the first ever peso-denominated issuance by the government, the Philippines may now issue local currency IOUs in the future. This, he said, would help cushion the economy from the external uncertainties and developments in the global environment such as dollar fluctuations.

He said the issuance of local currency bonds could be part of the government’s yearly borrowing program, possibly for the next 10 years or even beyond the Aquino administration’s six-year term.

Last Thursday night, the Aquino administration successfully raised $1 billion or the equivalent of P44.109 billion through the sale of 10-year peso-denominated global bonds, marking the first ever local currency offshore bonds by the Philippines and by an Asian country.

In a radio interview yesterday, Purisima dubbed the transaction as a “landslide vote of confidence by the global financial markets in the leadership of President Aquino III and his economic agenda.”

Bids totaled $13.3 billion for the $1 billion issuance or 13 times oversubscribed.

The newly issued bonds, which were priced at 99.607 percent with a coupon of 4.95 percent and a yield of 5.0 percent, will mature in January 2021.

The United States SEC-registered bonds are peso-denominated but will be settled offshore in US dollars, the Finance department said.

The bookbuilding process for the offering took approximately 16 hours.

By geographical allocation, 37.1 percent of the orders came from Asia, 32.6 percent from the US and 30.3 percent from Europe.

Proceeds would be used to finance the government’s budgetary requirements and is part of the government’s management of external liabilities, particularly with respect to reducing its vulnerability to foreign currency risk.

Citi and Deutsche Bank acted as joint global coordinators for the transaction. Citi, Credit Suisse, Deutsche Bank, Goldman Sachs (Asia) L.L.C., HSBC and J.P.Morgan were the joint bookrunners.