The Philippine government raised $2.5 billion through a triple-tranche global bond offering, its second dollar-denominated issuance this year.
Finance Secretary Ralph Recto expressed satisfaction with the strong investor interest, noting that the Philippines achieved among the best pricing for all tranches compared to regional peers. “This is a significant win for every Filipino as we are raising funds at very affordable costs to support programs and projects that will boost economic growth, create quality jobs, increase incomes, and reduce poverty,” he said.
The Bureau of the Treasury issued 5.5-, 10.5-, and 25-year fixed-rate global bonds under the Republic’s Sustainable Finance Framework.
The government capitalized on moderating benchmark yields, driven by softer inflation data and expectations of Federal Reserve interest rate cuts. National Treasurer Sharon Almanza said the tight pricing reflects continued investor confidence in the Philippines’ creditworthiness and economic performance.
“The exceptionally tight pricing across all offerings enables the government to conserve on interest payments, thereby allowing more fiscal space to flow into transformative investments. Thus, the favorable outcome of the transaction further strengthens the Philippine government’s position to fulfill its commitments to fiscal consolidation and rapid economic growth,” she said.
The proceeds from the 5.5- and 10.5-year bonds will be used for general budget purposes, while the 25-year bond proceeds will support general budget financing, refinancing programs and expenditures aligned with the Sustainable Finance Framework.
HSBC, Standard Chartered Bank, and UBS served as joint sustainability structuring banks. BNP Paribas, Citigroup, Goldman Sachs, HSBC, J.P. Morgan, Morgan Stanley, Standard Chartered Bank, and UBS acted as joint bookrunners.
The offering attracted robust demand from a diverse pool of global investors, highlighting their confidence in the Republic’s credit profile and long-term outlook.
The new 5.5-year tranche has a yield of 4.375 percent, priced at T+75 basis points, 35 basis points tighter than the initial price guidance. The 10.5-year tranche landed at a yield of 4.750 percent (T+95bps), 30 basis points tighter than initial guidance. The 25-year sustainability tranche was priced at 5.175 percent at par, 32.5 basis points tighter than the initial price guidance.
Compared to other BBB-rated sovereigns in the region, the 5.5-year spread is the second tightest achieved in 2024 among 5/5.5-year issuances. The all-in yield for the 10.5-year is the tightest among all 10/10.5-year issuances since May 2022. The all-in yield for the 25-year is the tightest among $25-year issuances since March 2022.
The global bonds are expected to be rated Baa2 by Moody’s, BBB+ by Standard & Poor’s, and BBB by Fitch. The transaction is expected to settle on Sept. 5, 2024.
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