PH to offer maiden Sukuk bonds

By Anna Leah Gonzales

November 27, 2023, 12:33 pm

MANILA – The Philippine government on Monday announced the sale of its maiden Islamic bonds or Sukuk bonds.

In an announcement, the Bureau of the Treasury (BTr) said it is planning the issuance of a benchmark-sized US dollar-denominated Sukuk bonds offering, which will have a 5.5-year tenure.

It also mandated Citigroup, Deutsche Bank, Dubai Islamic Bank, HSBC, MUFG and Standard Chartered Bank to arrange a series of fixed income investor calls in Asia, Europe, Middle East and the United States commencing Nov. 27.

In September this year, Finance Secretary Benjamin Diokno said the government aims to raise USD1 billion from the issuance of Sukuk bonds.

He said the Islamic issuances will help diversify the government's sources of financing and widen investor base.

Sought for comment, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said that since this is a new issuance, there could be some market excitement that would lead to higher bids.

"Market conditions locally and worldwide already improved since the start of November 2023, in terms of lower U.S. sovereign bond yields amid easing inflation trend towards central bank targets and pause in Fed(eral Reserve) and local policy rates for now, and would even lead to a possible cut in Fed rates in 2024 that could be matched locally," he said.

"Thus, both bond issuers and investors are in a sweet spot in terms of lower borrowing costs, while investors would still enjoy relatively higher bond yields that already reached a near-term peak or inflection point in October 2023, so [this is] a win-win for both borrowers and investors," he added. (PNA)