NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA
On 5 October 2022, Republic of the Philippines (the “Republic”) successfully returned to the international capital markets for the third time in 2022 with a benchmark USD2.0 billion three- tranche 5-, 10.5- and 25-year SEC-Registered Fixed Rate Global Bonds (the “Global Bonds” or the “Notes”). The 25-year Global Bonds were issued under the Republic’s Sustainable Finance Framework and marks the Republic’s third ESG G3 bond offering. The transaction follows the Republic’s JPY70.1 billion four-tranche Samurai bond offering in April 2022 and USD2.25 billion three-tranche bond offering in March 2022.
The new 5- and 10.5-year tranches were priced at U.S. Treasury plus 120 and 185 basis points (“bps”) with a coupon of 5.170% and 5.609% respectively, 35 bps tighter than an initial pricing guidance of U.S. Treasury plus 155 and 220 bps area, respectively. The 25-year Sustainability tranche was priced at 6.100% with a coupon of 5.950%, 45 bps tighter than initial pricing guidance of 6.550% area.
The Global Bonds are expected to be rated Baa2 by Moody’s, BBB+ by Standard & Poor’s, and BBB by Fitch. The transaction is expected to settle on 13 October 2022.
Despite the ongoing weakness in global credit markets amid high inflation and rising U.S. interest rates, the Republic was able to navigate volatile market conditions and successfully price the Global Bonds. The Republic attracted interest from a diverse pool of international investors, showcasing strong investor appetite globally for the Republic.
The Republic’s Finance Secretary Benjamin Diokno said, “The strong demand for our first international bond offering under President Marcos’ administration demonstrates investor confidence in the new government and the administration’s six-year plan of economic transformation to a more inclusive, resilient, and prosperous economy. The eight-point agenda of the new administration will improve real GDP growth, improve government finances, protect purchasing power, mitigate socioeconomic scarring and create more quality jobs.”
Philippine Economic Briefings (“PEBs”) were held in Singapore and New York last month, attended by President Ferdinand Marcos Jr., and received strong interest and attendance from global investors and other international delegates.
Undersecretary Mark Dennis Joven commented, “We are pleased to see that the Republic’s USD bond offering has once again received overwhelming interest across all tranches. The repeated successes of all international bond issuances by the Republic reflects the strong following from the global investor community for the Philippines and is a testament to the Republic’s robust credit profile and sound government finances.”
The Republic’s National Treasurer Rosalia de Leon remarked, “The success of this transaction is an indication of the Philippines’ readiness to brave choppy waters in pursuit of excellent results. Just as we were able to deftly capture a good execution window amid a daunting volatile market environment to attain our financing objectives at favorable cost, we too shall rise above the present difficulties through our eight-point economic blueprint toward differentiating ourselves as the prime destination of choice among quality-conscious investors.”
The Republic intends to use the proceeds from the sale of the 5- and 10.5-year Global Bonds for general purposes, including budgetary support. The proceeds from the 25-year Global Bonds will be applied to finance or refinance assets under the Republic’s Sustainable Finance Framework. Standard Chartered Bank and UBS acted as Joint Sustainability Structuring Banks.
BofA Securities, Goldman Sachs, HSBC, J.P. Morgan, Morgan Stanley, SMBC Nikko, Standard Chartered Bank and UBS acted as Joint Bookrunners for the transaction.
*A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time.
This press release does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or any other jurisdiction in which such an offer would be unlawful, and any securities described in this press release may not be offered or sold in the United States absent registration or an exemption from registration. Any offering of securities by the Republic in the United States would be made by means of a prospectus, which would be obtainable from the Republic or the Joint Bookrunners and would contain detailed information about the Republic, including certain statistical information.
###
