Philippines raises $2.75-B in global bonds at record low coupons

MANILA – The Philippines raised $2.75 billion from the sale of new 10.5-year and 25-year U.S. dollar denominated bonds, with the government securing its lowest-ever cost of financing, officials said on Thursday.

The 10.5-year tranche was issued with a coupon of 1.648 percent, while the 25-year tranche was priced at 2.65 percent.

Philippine central bank governor Benjamin Diokno said these were the lowest coupon rates secured for the debt.

Investor appetite was strong for the Philippines’ third global bond offering this year as positive news on COVID-19 vaccine trials has boosted inflows into Asia-Pacific credit markets.

The Philippines, one of Asia’s most active issuers of sovereign debt, would use the proceeds from the bond sale to support its budget, the Bureau of the Treasury said.

Both chambers of congress have approved a record 4.5 trillion pesos ($94 billion) budget for 2021, part of which will be used to purchase COVID-19 vaccines as the government aims to immunize a third of its 108 million population.

Finance Secretary Carlos Dominguez said the success of the bond offering underpinned investor confidence in the Philippine economy’s strong fundamentals despite the global economic downturn caused by the pandemic.

The Philippines raised 1.2 billion euros by selling its first ever zero coupon three-year euro-denominated bond in January, and raised another $2.35 billion from a dual tranche U.S. dollar bond offering in April.

The Philippines sank deeper into recession in the third quarter, but the economy is expected to bounce back next year, as it gradually lifts coronavirus curbs to allow more businesses to operate and more people to get back to work.

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