THE REPUBLIC OF THE PHILIPPINES ISSUES NEW 25-YEAR USD-DENOMINATED GLOBAL BONDS AND HAS ANNOUNCED THE RESULTS OF ITS INVITATION FOR OFFERS TO SELL EXISTING US DOLLAR DENOMINATED BONDS FOR CASH
The Republic of the Philippines (the “Republic”) successfully returned to the international capital markets with its offering of USD2.0 billion of 25-year USD Global Bonds. The new issue of Global Bonds occurred concurrently with a 1-day Accelerated Switch Tender Offer for 15 series of USD bonds maturing between 2016 and 2034.
The newly-issued Global Bonds were priced at par with a coupon of 3.95% after an initial pricing guidance of 4.20% area. This is the lowest coupon ever issued by the Republic to date on a global bond.
Order books were approximately USD13.5 billion. By geographical allocation, 41% came from Asia, 47% from the U.S. and 12% from Europe.
Finance Secretary Cesar V. Purisima said, “We continue to pursue liability management transactions that provide opportunities to reduce high coupon debt while achieving interest expense savings which the government can instead use for more inclusive initiatives.”
Proceeds of the issuance will be used to fund the Republic’s switch and tender offer, and the remaining will be used for general purposes, including budgetary support.
The tender offer exercise targeted existing bondholders to switch into the new Global Bonds. Bonds with a total notional value of USD4.4 billion were submitted for the switch tender offer and the Republic accepted a market value of USD 1.5 billion from the submissions.
“Despite the volatility we have seen at the start of the year, we continue to see strong support by investors in our bond program, which enabled the Republic to achieve a stronger fiscal position for the Philippines. The series of liability management programs has significantly reduced debt repayment risks” commented Treasurer Rosalia de Leon.
Deutsche Bank and HSBC served as joint global coordinators and dealer managers for the transaction. HSBC is acting as the Billing and Delivery bank.
Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, J.P. Morgan, Morgan Stanley, Standard Chartered Bank and UBS acted as joint bookrunners.