Philippines raises $2.35 billion from bond sale during pandemic

Ralf Rivas

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Philippines raises $2.35 billion from bond sale during pandemic
The Philippines boosts its coffers and follows other emerging nations in selling bonds, as the global economy goes into a recession due to the coronavirus pandemic

MANILA, Philippines – The Philippines raised $2.35 billion from its sale of dollar-denominated offshore bonds, boosting its coffers amid the coronavirus pandemic.

The Bureau of the Treasury (BTr) announced on Tuesday, April 28, that $1.35 billion in 25-year and $1 billion in 10-year papers were sold.

The 10-year dollar bonds have a coupon rate of 2.457%, while the 25-year dollar bonds were sold at 2.95%.

The Philippines follows other emerging nations in selling bonds amid a global recession. (WATCH: Rappler Talk: Coronavirus and the economy)

The rates were lower by 40 basis points (bps) and 42.5 bps, respectively, from the government’s initial pricing guidance.

“The transaction was able to achieve the Republic’s lowest ever coupon for a 10- and 25-year benchmark issuance amidst no less than an environment gripped with pandemic fear. This makes the Philippines, at least for the time being, a diamond in the sovereign issuance space for we were able to convert immense pressure into an opportunity to dazzle in brilliant shine,” said National Treasurer Rosalia de Leon.

The BTr said proceeds of the issuance will be for the country’s general purposes, including budgetary support, during the coronavirus crisis.

The transaction is expected to settle on May 5.

This deal follows a €1.2-billion double tranche global bond offering last January, as well as the $1.5-billion and €750-million global bond offerings in 2019. 

The BTr said the global bonds are expected to be rated Baa2 by Moody’s, BBB+ by Standard & Poor’s, and BBB by Fitch. 

According to Moody’s, a Baa2 issuer rating is “characterized by strong economic performance, a strengthening fiscal position, and limited vulnerability to external shocks.”

“The strong demand for this bond issue demonstrates the resiliency of investor interest in the Philippine economy despite the global economic fallout from the COVID-19 pandemic,” said Finance Secretary Carlos Dominguez III.

The Philippines expects its budget deficit to widen to 5.3% of gross domestic product from 3.6% in 2019, with the expected massive revenue shortfall. (READ: Philippines to borrow more than planned to combat coronavirus impact–

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Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.