PH sells $750-M, 10-yr global peso notes

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Priced at a yield of 3.90%, the notes are sold to investors in the US, Asia and Europe

MANILA, Philippines (UPDATED) – The Philippines successfully sold on Friday, November 9, P30.8 billion (US$750-million), 10-year global peso notes at a low yield of 3.9%, the Finance department announced.

The government launched the offer — the third of its kind — on Thursday, November 8, to raise funds for the buyback of expensive foreign debt as part of its liability management program.

Finance Secretary Cesar Purisima said the transaction allowed global investors to participate in the growth of the Philippines, which is only a notch shy of the investment grade status.

“The transaction allowed global investors the opportunity to participate in the impressive growth story of the Philippine economy, which is considered today to be one of the safest emerging market sovereigns to invest in,” he said in a statement.

The notes were sold to investors in the US (41%), Asia (30%) and Europe (29%).

Finance Undersecretary Rosalia de Leon said the transaction improved the mix of the country’s debt portfolio, in favor of the local currency, reducing its vulnerability to foreign exchange fluctuations.

Proceeds of the issue will be used to retire the Philippines’ US dollar and euro bonds with high interest rates, generating savings for government and extending the maturity of its liabilities.

Purisima earlier said that “rebalancing” the country’s debt portfolio and reducing its exposure to exchange risks “will help position the country for further positive ratings action by the credit rating agencies.”

All 3 major international credit watchers — Moody’s, Fitch Ratings and Standard & Poor’s — rate the Philippines one notch below investment grade. Better ratings translate to lower borrowing costs for the country.

The last time the Philippines issued globel peso notes was in January 2011, when it raised $1.25 billion. The first ever offer of such notes amounting to $1 billion happened in September 2010.

Credit Suisse, Deutsche Bank, and HSBC acted as joint global coordinators for the latest global peso notes transaction. The banks, along with Citi, Goldman Sachs, J.P. Morgan, Morgan Stanley, Standard Chartered Bank, and UBS, served as joint bookrunners. –

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