Philippines Plans to Raise Up to $2b From Sale of 10-Year US Dollar Bond

Philippine Finance Secretary Carlos Dominguez. (Reuters Photo/Kim Kyung-Hoon)

By : Karen Lema | on 8:00 AM January 19, 2018
Category : International, SE Asia

Manila. The Philippines has started marketing 10-year US dollar bonds and could issue up to $2 billion worth, the country's finance secretary said on Thursday (18/01), which will help fund President Rodrigo Duterte's record budget.

The national budget this year tops the previous year's spending by more than 12 percent as the government forges ahead with plans to build and modernize its airports, ports and railway systems, to attract investors and boost economic growth.

Finance Secretary Carlos Dominguez told reporters at the opening of a bank on Thursday that the government planned to issue up to $2 billion worth of new 2028 bonds.

The bond deal has a new money component of $1 billion and bond swap of another $1 billion, a source with direct knowledge of the transaction said, declining to be identified because other details of the issue are not yet public.

Proceeds from the bond sale will be used to help finance the national government's 3.8 trillion pesos ($74.86 billion) budget this year, the biggest ever, as Duterte boosts infrastructure spending.

The bonds are marketed at initial yield guidance in the 3.30 percent area, said IFR, a unit of Thomson Reuters.

Citigroup and Standard Chartered are dealer managers for the tender, which ended on Thursday.

Credit agencies Standard & Poor's and Moody's gave the bonds a BBB and Baa2 debt rating, respectively, which mirror the Philippine sovereign's long-term currency issuer rating.

The Philippines, one of Asia's most active sovereign bond issuers, raised $500 million from a new 25-year US dollar bond offering in January last year. It also switched $1.5 billion worth of the same long-term bonds.

Manila's borrowing plan this year includes a Samurai bond issue, which Dominguez has said may take place toward the latter part of 2018 and a Panda bond offering, which is awaiting approval from China's monetary authority.

Duterte has promised to usher in a "golden age of infrastructure" by raising annual spending on it to 7 percent of gross domestic product from less than 3 percent before he came to power more than 18 months ago.


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