Phl domestic bond issue named deal of the year

MANILA, Philippines – The P323.4-billion Domestic Debt Consolidation program of the country has bagged The Banker Magazine’s Deal of the Year 2012 for Sovereign, Supras and Agencies (SSA) Bonds category in Asia Pacific.

The deal bested over 500 entries and only one winner was selected for each of the 10 categories across every region.

The deal is the sixth and historically the largest domestic debt exchange by the Republic of the Philippines. In the transaction, P292.5-billion worth of eligible bonds were swapped for new benchmark issues, which are due 2022 and 2031.

The total issue size was P323.4 billion which was divided into a 10-year P67.6 billion-bond and a 20-year P255.8 billion-bond, with coupon rates of 6.375 percent for the 10-year and eight percent for the 20-year bond.

First Metro Investment Corp. (FMIC), together with BPI Capital, Citicorp Capital Philippines and SB Capital and Investment Corp., were the joint deal managers for this transaction. Deal coordinators were Development Bank of the Philippines (DBP) and Land Bank of the Philippines (Landbank).

 “This landmark deal did not only enable the government to reduce the bunching of debt maturities, giving more room in the use of its funds for necessary spending, it has also more importantly reaffirms the growing investor confidence in the Philippines,” Roberto Juanchito Dispo, FMIC president, said.

The exchange program smoothened and extended the debt maturity profile of the Philippines by reducing the maturity hurdles from bonds that were due to mature in the next few years.

 Of the bonds that were swapped, 75 percent had maturities that were due between 2011 and 2017, and the program reduced the near-term maturity hurdles.

The deal also lengthened the average maturity of the portfolio of eligible bonds by 37.9 percent from 5.48 years to 7.56 years.

It paved the way for long-term financing in line with initiatives to promote public-private partnerships in infrastructure projects and has deepened the Philippine capital markets.

The entries were judged based on a wide range of criteria with a strong emphasis on the degree to which the objectives of deals were met as well as deal complexity, innovation, speed of execution and pricing performance.

The Banker’s Deal of the Year recognizes the most impressive transactions in capital raising, M&A, corporate bonds, SSA bonds, infrastructure and project finance, equities, loans, restructuring, Islamic finance and trade finance.

The Banker is a London based international financial affairs publication owned by The Financial Times Ltd.