(Bloomberg) — The Philippines on Thursday sold a two-part dollar bond and a euro tranche, capitalizing on a recent drop in borrowing costs abroad.
The Southeast Asian nation, which has investment-grade credit ratings, raised $2.25 billion (2.4 billion euros) in dollar-denominated bonds due in 10 and 25 years, along with a €1 billion ($1.04 billion) 7-year bond, according to people familiar with the matter who asked not to be identified. The 25- and 7-year notes are sustainable debt.
The offering is the Philippine government’s first trip to the international market this year and the latest addition to a flurry of dollar bonds from Asian borrowers looking to lock in rates at near record-low premiums over Treasuries.
The deal also underscores the rising popularity of sustainability debt amid strong demand for green investments as nations boost usage of low-carbon energy sources.
The Philippines’ latest 10-year bond will yield 90 basis points above comparable US Treasuries, down from initial talk of about 120 basis points. The 25-year sustainability note will yield 5.9%, versus initial talk of around 6.1%. Investor orders topped $4 billion, according to one of the people.
The 7-year euro bond priced at mid-swaps plus 125 basis points, tighter than initial discussions of about 160 basis points, another person said.
The Philippines is one of the most active sovereign issuers in the region, as it relies on funds overseas to help finance a persistent budget deficit, estimated at 1.54 trillion pesos ($26.2 billion) this year, or about 5.3% of the nation’s economic output.
The government has about $1.5 billion in dollar bonds that will be due in March and €650 million in debt in April, according to data compiled by Bloomberg. It plans to raise $3.5 billion from overseas bonds this year as rate cuts continue, Finance Secretary Ralph Recto said early this week.
Read: Philippines Plans $3.5 Billion in Global Bond Sales This Year
In 2024, the Philippines made two trips to the international dollar bond market, with a $2 billion two-part deal in May that year and another $2.5 billion three-part note in August.
Among the regional borrowers recently lured by tighter spreads to the US-currency debt market are Philippine lender Rizal Commercial Banking Corp. which raised $350 million from 5-year bond this week. Indonesia’s PT Perusahaan Listrik Negara has requested proposals from banks for a dollar bond offering of as much as $1.5 billion, while its government sold $2 billion and €1.4 billion bonds in early January.
–With assistance from Paul Cohen.
(Updates with pricing details.)
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