Government launches $2-B global bonds

MANILA, Philippines - The Bureau of the Treasury (BTr) formally commenced yesterday its plan to issue $2 billion worth of global bonds due in 2028, to support the country’s programs and liability management efforts.

Half of the offering volume will be used to raise new money, while the remaining $1 billion will be swapped with existing securities, National Treasurer Rosalia de Leon said in a text message.

The BTr said the rate-setting auction for the new 10-year bonds is expected to occur at approximately 4 pm, New York City time, on Jan. 18, 2018, (5 am, Manila time, on Jan. 19).

The settlement of the bond offering is expected on Feb. 1.

According to the BTr, the government has tapped Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Morgan Stanley & Co. LLC, Standard Chartered Bank and UBS AG Hong Kong Branch as the joint lead managers for the new bond offering.

Meanwhile, Treasury said it has issued an invitation to holders of existing global bonds, maturing up to 2037, to submit offers to sell them for cash.

The BTR said any accrued interest (interest accumulated since previous coupon payments) on the debt papers will be payable in cash on Jan. 25.

Citigroup Global Markets Inc. (CITI) and Standard Chartered Bank will act as the dealer managers, while CITI will also act as billing and delivering bank for the transactions.

Under its liability management program, the government pays securities ahead of schedule to free up portions of the national budget tied up to debt payments. It then issue longer-dated obligations to delay future settlements.

The last time the government issued global bonds was in February in 2017, when it raised $500 million in fresh money and swapped $1.5 million in debt papers.

For 2018, the Philippine government is programmed to borrow $3.456 billion or P176.26 billion from foreign lenders, corresponding 20 percent of the P889.51 debt ceiling set next year.