By Anna Leah G. Estrada
The government raised $750 million from the sale of 10-year peso bonds overseas to help finance the budget deficit and manage its debt.
The Finance Department said in a statement the newly-issued peso global bonds, the third of their kind offered by the country, were priced at 100 percent with a coupon of 3.90 percent.
“The transaction allowed global investors the opportunity to participate in the impressive growth story of the Philippine economy, which is considered today to be one of the safest emerging market sovereigns to invest in,” said Finance Secretary Cesar Purisima.
The proceeds will be used to redeem global bonds denominated in euros and the US currency.
The government, which was originally planning to raise up to $1 billion, cut the issuance size after deciding to buy the additional foreign currency from the Bangko Sentral, according to Finance Undersecretary Rosalia de Leon, who was appointed as the new Treasurer.
Foreign exchange reserves of the Bangko Sentral reached a record $82.1 billion in October, more than double what they were at the end of 2008.
“The yield would have stayed at 3.9 percent even if we got $1 billion,” De Leon said in an interview. “We have a lot of cash. It would help Bangko Sentral ng Pilipinas with the peso if we tap the reserves,” she said.
The government said it sold the bonds within eight hours of bookbuilding process, with 30 percent of investors coming from Asia, 41 percent from the United States and 29 percent from Europe. Investors bid 7.2 times the amount of offer.
“Positive investor perception of the Philippine credit allowed us to achieve our objective of redenominating our debt into the local currency,” De Leon said.
Credit Suisse, Deutsche Bank and HSBC acted as joint global coordinators, while Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, J.P. Morgan, Morgan Stanley, Standard Chartered Bank, and UBS acted as joint bookrunners for the transaction. With Bloomberg