THE Department of Finance (DOF) is looking at different debt markets globally as possible sources of funding for the government, and a possible issuance of global bonds is being eyed this year, with the offer size between $1 billion and $2 billion.
Finance Secretary Carlos G. Dominguez III told reporters that he has instructed the Bureau of the Treasury (BTr) to move ahead with the schedule for the issuance of Republic of the Philippines (ROP) bonds this year rather than the usual schedule, which is every first month of the year, considering possible headwinds that can emerge globally.
“I asked Lea [National Treasurer Rosalia V. de Leon] to please bring the schedule forward rather than wait for next year because of all the announcements and the uncertainties that are, I think, going to start impacting the market more. Better make the issuance program earlier rather than keep it at the end of January,” Dominguez explained.
He stressed, though, that the issuance of ROP bonds this year will still depend on market conditions, adding that it will be a prefunding of the government.
“That will be the one, the 2019 [issuance], we are planning to do it earlier. But again [that] depends on market conditions. And then for the [European investors]…maybe another [one for the US market] next year,” he added.
He said that the Philippine government is also looking at the euro market, adding that the country is getting invitations from different markets in Europe to conduct nondeal road shows.
“I don’t know if we can finish the Euro [road show] this year but certainly next year,” he said. The finance chief pointed out that the Duterte administration is also looking to make a presentation for the Wealth Fund of Norway, in line with looking at the different markets
in Europe.
“I also told Lea maybe we should make a private presentation to the Wealth Fund of Norway. That’s the biggest in the world,” he said. Dominguez said that the government’s aim is for the Philippines to be present at major global markets for long periods of time.
“We also told the other bankers that our policy now is not to be absent from any major market for long periods. The Samurai [market], we are going to come back within 12 to 18 months from August. In China, we will come back to the market again within 12 to 18 months from last March,” he added.
In January this year, the Philippines successfully returned to the international capital markets with its offering of $2 billion new 10-year global bonds, with the bonds priced on a par with a coupon of 3.000 percent.
Of the total new issuance, $1.25 billion was allocated to the participants of the Switch exercise, while the remaining $750 million was allocated to new money investors.
Citigroup and Standard Chartered Bank acted as dealer managers for the Switch exercise and acted as joint global coordinators for the global bond issuance.
Citigroup, Credit Suisse, Deutsche Bank, Morgan Stanley, Standard Chartered Bank and UBS acted as joint deal managers and book runners for the issuance.
In March this year, the country also became the first Association of Southeast Asian Nations (Asean) sovereign to issue Panda bonds amounting to 1.46 billion in renminbi, with the three-year debt paper fetching a coupon rate of 5.00 percent.
Bank of China served as lead underwriter of the bond issuance, and Standard Chartered Bank as joint lead underwriter.
In August this year, the government also issued Samurai bonds amounting to ¥154.2 billion ($1.39 billion), with the issuance marking the return of the Republic of the Philippines to the samurai market after an eight-year break, and the first time in almost 20 years that it has issued samurai bonds on a stand-alone basis.
According to the DOF, the issued samurai bonds bore a three-, five- and 10-year tenor. The issue size for the three-year tenor was at ¥107.2 billion; for the five-year tenor bucket, ¥6.2 billion; and for the 10-year bond,
¥40.8 billion.
The issuance also marked a coupon rate of 0.38 percent for the three-year tenor, 0.54 percent for the five-year IOU and 0.99 percent for the 10-year tenor bucket, which posted a 25-basis-point, 35-basis-point and 60-basis-point increase, in terms of pricing compared to benchmark rates, respectively.
Daiwa Securities Co. Ltd., Mitsubishi UFJ Morgan Stanley Securities Co. Ltd., Mizuho Securities Co. Ltd., Nomura Securities Co. Ltd. and SMBC Nikko Securities Inc. acted as joint lead managers and book runners for the issuance of the placement.