The government is not raising $2.5 billion from global bonds

THE GOVERNMENT has risen $2.5 billion from triple-digit salesglobal tranche denominated in US dollars bonds, his second foray into the ininternational debt market this year.

“We are very pleased with the overwhelming interest from investors in our new $2.5 billion global bonds in three tranches,” Treasury Secretary Ralph G. Recto said in a statement. “In fact, compared to our regional peers, this year’s Philippines issuance was among the best priced across all our tranches. This is a loud dissenting voiceFidentity in our country’s solid credit professionalFile.”

The total amount raised was in line with Mr Recto’s previous target from 2 to 2.5 billion dollarslion.

The Bureau of the Treasury (BTr) said the 5.5-year bonds, which mature on March 5, 2030, have a yield of 4.375%. This was priced 35 basis points (bps) more competitively than the initial guidance.

The new 10.5-year notes, which mature on March 5, 2035, were priced at 4.75%, 30 basis points higher than initial guidance.

The new sustainability bonds with a term of 25 years, which mature on September 5, 2049, have a yield of 5.175%. This was 32.5 bps tighter than the previous guidance.

The BTr said it issued the bonds as benchmark yields were moderating following dovish policy from the US Federal Reserve, supporting market expectations of a September rate cut.

“The 5.5-year spread is the tightest among all 5/5.5-year US dollar issuances by the Philippines since June 2021, while the all-in yield for the 10.5 and 25-year issues is the smallest of all issues with a term of 10.5 years in US dollars. /10.5 and 25-year issuances by the Philippines since March 2022,” the BTr said.

National Treasurer Sharon P. Almanza said the tight pricing of global bonds reFspeaks of “continued confidence in the country’s creditworthiness and robust economic performance.”

“The exceptionally competitive prices for all offers allow the government to save on interest payments, making more possible Fiscal space Flow in transformative investments,” she said in a statement.

IFR reported that the government has raised $500 million from 5.5-year bonds; $1.1 billion from 10.5-year notes; and $900 million from sustainability bonds.

The total bid amounted to $4.86 billion, IFR said. The 5.5-year notes attracted bids worth $860 million from 65 accounts.

For the 10.5-year bonds, bids reached more than $2.2 billion from 121 accounts. The books for the 25-year bonds reached more than $1.8 billion from 103 accounts.

BNP Paribas, Citigroup, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley, Standard Chartered and UBS were appointed as joint lead managers and bookrunners. HSBC, Standard Chartered and UBS were joint banks structuring sustainability.

The government plans to borrow $5 billion this year, of which $2 billion was raised from a global bond issue in May. The $2.5 billion raised from the latest dollar bond issuance leaves $500 million yet to be raised.

In a text message, Mr Recto said the remaining amount is in the government’s accountFThe offshore lending plan would consist of Eurobonds or Samurai Bonds.

Michael L. Ricafort, chief economist of Rizal Commercial Banking Corp., said in a Viber message that the assigned interest rates had narrow spreads compared to U.S. Treasury yields.

“Spreads below 100 basis points are considered unusually low/cheap for the national government,” he said.

“As a result, the government has saved on borrowing/financing costs, with yields among the lowest in more than seven months and spreads among the tightest.”

Ruben Carlo O. Asuncion, chief economist of Union Bank of the Philippines, Inc., said in a Viber message that the yields assigned were attractive to investors as interest rates are expected to continue falling as the U.S. Federal Reserve begins its easing cycle.

“These are attractive returns and investors are very interested. As an investor, you are stuck before interest rates are cut by the US Fed and interest rates start falling further,” he said.

Emilio S. Neri, Jr., chief economist of the Bank of the Philippine Islands, said in a Viber message that the government timed the issuance well as the benchmark interest rate could move higher in the coming weeks, which would have cost the government more .

“The issuances are reasonably well timed, resulting in relatively tight margins between the announced maturities and their global benchmarks. Benchmark rates could rise in the coming weeks, which could cost BTR much more,” he said.

Fitch Ratings assigned the bonds a “BBB” rating, while Moody’s Ratings gave them “Baa2” and S&P Global Ratings rated them “BBB+.” These reflect the ratings of the Philippine issuers.

The bonds come from the Philippine government’s existing shelf program, which includes tranches maturing in 2030, 2035 and 2049. Aaron Michael C. Sy with input from Beatriz Marie D. Cruz