THE Philippines successfully raised $1 billion from its maiden sale of 5.5-year Sukuk (Islamic bond) issuance, the Bureau of the Treasury (BTr) announced.
The Treasury said the state successfully priced its maiden Sukuk issuance that utilized real estate assets under ijara (lease), wakala (agency) and commodity murabaha (cost-plus-profit margin sale) aspects.
“The Sukuk, with an issuance size of USD 1 billion and a tenor of 5.5 years, marks the first time the Republic has tapped the global Islamic financial markets in this structure,” the Treasury said through a statement it issued last Thursday.
The amount raised from the Sukuk issuance would be used by the national government for various purposes, including budgetary support, according to the Treasury.
The Treasury said the maiden issue was met with a “strong” demand with the orderbook’s oversubscription peaking at 4.9 times.
“This allowed the Republic to price its 5.5-year Sukuk at T+80 basis points (bps), with a profit rate of 5.045 percent, representing a 35 bps compression from the initial price guidance of T+115bps area,” it said.
The Philippines’s Sukuk, which is anticipated to settle on December 6, is expected to be rated d Baa2 by Moody’s, BBB+ by Standard & Poor’s, and BBB by Fitch, according to the Treasury.
The Treasury reiterated that the maiden Sukuk issuance is part of the Philippines’s agenda to promote the development of Islamic banking and finance in the country. Furthermore, the Sukuk allows the country to diversify its borrowing strategies as it taps the Islamic-focused investors across the Middle East, it added.
The Treasury added that the Sukuk issuance did not just “attract strong interest” from a wide range of high-quality Islamic investors but also from others, indicating investors’ confidence in the national government’s credit profile.
“The success of our inaugural Sukuk issuance affirms the Republic’s significant standing in the international capital markets and underscores investors’ conviction in our financial inclusion agenda,” Finance Secretary Benjamin E. Diokno said.
“We hope this transaction will create positive momentum for Islamic banking and finance in the Philippines, and we look forward to the active participation of all stakeholders,” Diokno added.
The national government tapped Citigroup, Deutsche Bank, Dubai Islamic Bank, HSBC, MUFG, and Standard Chartered Bank as joint bookrunners and joint lead managers for the Sukuk issuance.