Philippines raises €750 million as investors clamor for bond sale

MANILA, Philippines – The Philippines returns to the European capital markets after over a decade and investors were in a frenzy.

The Bureau of Treasury (BTr) reported on Friday, May 10, that it successfully raised €750 million or about P44 billion with its offering of 8-year global bonds with a 0.875% coupon. 

The BTr said the bond sale was 6 times oversubscribed, driving down the interest rate.

The notes are expected to settle on May 17.

Twenty-four percent of the bonds were allocated to Germany, 15% to Italy, 10% to the United Kingdom, 26% to the rest of Europe, 9% to the United States, 6% to the Philippines, 5% to the rest of Asia, and the remaining 5% to other countries. 

In terms of investor type, 59% went to fund managers, 24% went to banks and corporates, 11% went to insurance, pension funds, and official institutions, and the remaining 6% went to other types of investors. 

The BTr said the bond sale was 6 times oversubscribed, driving down the interest rate.

The news comes as the Philippines reported a slower-than-expected gross domestic product growth of 5.6% in the first quarter of 2019. 

Last week, the Philippines got its highest credit rating of BBB+ from Standard and Poor Global, one notch below the minimum "A" rating. (EXPLAINER: What's in it for us if the PH has good credit ratings?)

“This successful transaction is a testament to the international investor community’s vote of confidence in the country’s strong macroeconomic fundamentals and sustained high growth prospects despite global financial headwinds,” said Finance Secretary Carlos Dominguez III. 

Proceeds of the issuance will be used for various purposes, including budgetary support.

“The successful transaction allowed us to diversify our funding program to support productive spending for infrastructure and social services,” said National Treasurer Rosalia de Leon.

The bonds are expected to be rated Baa2 by Moody’s Investor Service, BBB+ by Standard & Poor’s, and BBB by Fitch Ratings.

Deutsche Bank and UBS acted as joint global coordinators, while BNP Paribas, Credit Suisse, and Standard Chartered Bank acted as joint bookrunners for the transaction. 

Prior to the euro bond sale, the Philippines issued renminbi and yen-denominated securities. –

Ralf Rivas

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