Award earned for first ever transaction as an investment grade sovereign
The Republic of the Philippines was awarded as the “Region’s Best Borrower” by FinanceAsia’s Fixed Income Research Poll 2014. The award cited the country’s innovative execution of the Accelerated 1-Day Switch Tender Offer and the concurrent US$ 1.5 billion new 10-year bond issue completed in January 2014. FinanceAsia hosted the awards dinner to congratulate all the winners of this year’s Fixed Income Research Poll last 29 October 2014, coinciding with the 3rd Annual Borrowers & Investors Forum- Southeast Asia in Singapore.
The Philippines targeted 11 series of bonds with a notional value of US$9.6 billion, where tendering investors could choose between switching into the new bond or tendering for cash. The bonds were tendered through dealer managers, saving time and reducing market risk exposure for the Philippines. Global investor response to the new 10-year bond issue was 9-times oversubscribed, with an orderbook of approximately US$ 13.5 billion from 500 investors reflecting strong demand.Deutsche Bank Securities, Inc., Hongkong and Shanghai Banking Corporation Limited and Standard Chartered Bank acted as joint lead global coordinators for the Philippines on this transaction.
The Accelerated ‘Switch’ Tender Offer was the first of its kind conducted in Asia, proving the Philippines’ sophistication as a sovereign issuer. This also marked the first international USD offering from the Philippines since January 2012 and its first as an investment grade sovereign.
Robust investor demand allowed the Philippines to aggressively price the securities and realize cost savings while extending the maturity of outstanding debt. The transaction also enabled the country to retire outstanding high coupon bonds, further bolstering fiscal strength through prudent and proactive liability management. The above transaction was followed by a domestic bond exchange in August as part of the strategy to rebalance the domestic portfolio and term out maturities.
FinanceAsia also highlighted the Government’s efforts to boost the development of the local capital market in promoting liquidity in the GS market and consolidating its debt portfolio. This was achieved by increasing the volume at auction and the re-issuance of outstanding benchmark securities. The success of this strategy is evidenced by the year-on-year decline in the number of outstanding securities and the secondary market activity of re-issued securities.
Treasurer of the Philippines Rosalia de Leon welcomed the news saying, “We are thankful for the recognition given by the international investors’ community in response to our efforts in proactive liability management. This reflects well on the development of the Philippine debt market and emboldens us to pursue more innovative strategies to managing sovereign debt.”