THE REPUBLIC OF THE PHILIPPINES ISSUES NEW 10-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 USD 1.5 billion of 10-year USD Global Bonds. The new issue of Global Bonds occurred concurrently with a 1-day Tender Offer for 11 series of USD bonds maturing between 2015 and 2025.
This issue of the Global Bonds marks the first international USD offering from the Republic since January 2012 and the Republic’s first ever international investment-grade issuance, achieving ratings of Baa3 from Moody’s Investor Services, BBB- from Standard & Poor’s, and BBB- from Fitch Ratings.
The newly-issued Global Bonds were priced at par with a coupon of 4.20%.
Order books were in excess of USD 13.5 billionfrom about 500 investors. By geographical allocation, 28% came from Asia, 53% from the U.S. and 19% from Europe. By investor type, 71% was allocated to fund managers, 24% to banks, and 5% to insurers.
Finance Secretary Cesar V. Purisima said, “We welcome this opportunity for the Republic to revisit the international markets, to herald its investment-grade status and establish a reference for the country’s credit. This exercise again demonstrates sustained government efforts to reduce the country’s debt burden and to channel more resources into productive endeavors.”
Proceeds of the issuance will be used to fund the Republic’s switch and tender offer. The Republic may also use the proceeds for general purposes, including budgetary support.
The tender offer exercise was primarily targeted at existing bondholders to switch into the new Global Bonds. The amount of bonds tendered equaled a notional value of USD 2.6 billion, and the Republic accepted USD 870 million of offers. This liability management transaction also marks the first intraday switch tender offer in Asia, evidencing the Republic’s sophistication as a sovereign issuer.
“As with our previous transactions, this exercise is in line with the government’s overall objectives of prudent and proactive liability management, and resulted in interest-cost savings as well as extended the average debt maturity profile of the Philippines. The result further bolstered the strength of the government’s financial position,” commented Treasurer Rosalia de Leon.
Deutsche Bank, HSBC, and Standard Chartered Bank served as joint global coordinators and dealer managers for the transaction. ANZ, Citi, Deutsche Bank, Goldman Sachs, HSBC, J.P. Morgan, Morgan Stanley, and Standard Chartered Bank acted as joint bookrunners.