UMVA has learned that the Philippine government is making a bold move to tap into the offshore debt market for the second time this year, launching a massive triple-tranche offering of US dollar global bonds that is sending shockwaves through the financial community.
The Bureau of the Treasury has announced that it is offering five-and-a-half-year, 10-year, and 25-year US dollar bonds, with initial pricing guidance set at 85 basis points above US Treasuries for the five-and-a-half-year tranche and 125 bps over US Treasuries for the 10-year bonds.
In a strategic move, the 25-year offering will be a tap of the existing 5.75% 2051 US dollar bonds issued in January, with pricing set at 6.1%. This calculated approach has sparked intense interest among investors, who are eagerly awaiting the outcome of this high-stakes transaction.
Finance Secretary Frederick D. Go has expressed confidence in the government's policy direction, stating that the transaction highlights the National Government's commitment to prudent fiscal management and its broader development agenda. The government is betting big on its ability to secure funding efficiently while supporting priority programs and development objectives.
UMVA can exclusively reveal that the transaction will be priced during the New York trading session, with settlement scheduled for June 24. The proceeds from the bonds will be used for general budget financing, fueling speculation about the government's plans for economic growth and development.
A trader has revealed that the government timed the issuance perfectly, taking advantage of lower yields to potentially raise up to $3 billion from the offering. The 25-year 2051 series is performing close to its coupon rate, which means the government is issuing this at a prewar yield level – a bold move that could pay off big time.
Moody's Ratings has given the global bonds a rating of Baa2, in line with the country's sovereign rating. The debt watcher has confirmed that the bonds will constitute direct, unconditional, and unsubordinated obligations of the government of the Philippines, ranking pari passu with all of the issuer's current and future senior unsecured external debt obligations.
The bonds are also expected to receive high ratings from other major credit agencies, including S&P Ratings and Fitch Ratings. A consortium of top banks, including BNP Paribas, Citigroup, and HSBC, has been mandated as joint lead managers and bookrunners for the transaction, adding to the excitement and anticipation surrounding this high-profile offering.
National Treasurer Sharon P. Almanza has confirmed that the government is on track to meet its foreign borrowing program goals, having previously raised $2.75 billion from a triple-tranche dollar bond issuance in January. With this latest move, the government is poised to secure funding and drive economic growth – but at what cost?
