MANILA -- The Philippines' 154.2-billion Japanese yen multiyear Samurai bond offering on Wednesday was warmly received by the market, and this was largely due to investors’ positive sentiment towards the country’s economic fundamentals, finance officials said.
In a statement, the Department of Finance (DOF) said the yen-denominated debt papers include the 107.2 billion yen worth of three-year bond that fetched a coupon rate of 0.38 percent, the 6.2 billion yen worth of five-year paper, which has a 0.54 percent coupon rate; and 40.8 billion yen worth of 10-year paper that fetched a coupon rate of 0.99 percent.
The issuance was made eight years after the country’s previous Samurai bond float and the first in nearly 20 years that the issuance is not guaranteed by any Japanese institution.
Pricing date was set on August 8, 2018 while settlement date is on August 15.
Finance Secretary Carlos Dominguez III said “deepening investor confidence” on the domestic economy boosted the debt paper’s attractiveness.
"The government's disciplined fiscal position, along with game-changing reforms starting with the new legislation--the Tax Reform for Acceleration and Inclusion (TRAIN) Law--that has modernized and simplified Philippine taxation, have created enough room for our current policy of aggressive investments not only in public infrastructure but in human capital formation as well,” he said.
The Finance chief said the government’s priority programs “are meant to sustain the country's momentum as one of Asia's fastest-growing economies, further improve its global competitiveness and bring lasting social benefits to all Filipinos in keeping with President Duterte's vision for high growth and financial inclusion.”
“And the strong response to this Samurai float, following a similarly successful offering of Panda bonds in China, underscores the international business community's increasing interest in investing in the Philippine growth story,” he said.
Last March, the government issued its first-ever three-year renminbi-denominated Panda bond, which is issued by a non-Chinese issuer in China, amounting to RMB 1.46 billion.
The Duterte government is currently active in overseas capital markets as part of its bid to diversify securities investments and take advantage of low interest rates given the country’s investment-grade ratings.
National Treasurer Rosalia De Leon, in the same statement, said 2018 is “a trailblazing year” for the Philippines in terms of its borrowing program.
She explained that government “has a track record of very tight pricing in US Dollar markets”, thus, “we will be uncompromising in measuring against that benchmark in approaching new markets.”
"Pricing on today’s offering is very compelling and we were able to print the maximum deal size we were seeking,” she added.
The government tapped Daiwa Securities Co. Ltd., Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., Mizuho Securities Co., Ltd., Nomura Securities Co., Ltd., and SMBC Nikko Securities Inc. as Joint Lead Managers and Book Runners for the yen-denominated bond issuance.
The country’s decision to diversify its securities investment is a good decision, Dr. Johanna Chua said during the Philippine Investment Conference 2018 Wednesday.
She said the current government should avail of the funding opportunities being offered by the Chinese government, among others, but stressed the need to be cautious.
“I do think the Philippines should explore all opportunities for financing but you have to be very careful as well on the choice of projects and cost of financing,” she added.
The government has been active on borrowing from offshore creditors to ensure funding for its massive infrastructure program called “Build, Build, Build”.
It has identified 75 flagship projects and 24 of these have been approved by the National Economic and Development Authority (NEDA) Board.
Of these 24 approved projects, 15 will get funding from Official Development Assistance (ODA), eight from the national budget, and one through public-private partnership (PPP). (PNA)
