PH sells $2-B dollar bond at record low rate, sees strong demand

Reuters

Posted at Feb 18 2016 12:12 PM

MANILA, Feb 18 (Reuters) - The Philippines' offer of 25-year U.S. dollar bonds attracted huge demand, in a sign of investor's confidence in the Southeast Asian economy, allowing the government to sell $2 billion worth of the paper at a record low rate.

The 2040 bonds were sold at a coupon of 3.7 percent, lower than Manila's initial guidance of 4.0 percent, Thomson Reuters publication IFR reported on Thursday.

Details of the investor book were not made public but orders were said to be north of $8 billion, IFR said.

The Philippines, which used to be one of Asia's most active sovereign bond issuers, will switch $1.5 billion worth of new 25-year bonds with existing bonds, sources at the Department of Finance said.

Holders of bonds maturing in Oct. 7, 2016 to Jan. 13, 2037 were allowed to participate in the bond switch.

Manila also will use $500 million in proceeds from the new issue to help fund its 2016 budget.

The Philippines will hold a presidential election on May 9. It is being closely watched by investors, who fear the political succession could derail the above 6 percent average economic growth and efforts to crack down on graft made during President Benigno Aquino's rule.

The Philippines last U.S. dollar issue was in January last year when it sold $2 billion of 25-year bonds at 3.95 percent.

It has relied more on onshore funding in recent years. It has a history of issuing sovereign bonds early in a year in the hopes of getting more favorable terms.

Citigroup, Deutsche Bank, HSBC and Standard Chartered were appointed deal managers for the fund raising and switch tender offer. They were also joint bookrunners with Credit Suisse, Morgan Stanley, JP Morgan and UBS.