Philippines to launch up to $1.5-B global bond sale

Posted at 03/21/2011 1:32 PM | Updated as of 03/22/2011 3:39 AM

MANILA, Philippines (UPDATE) - The country is set to launch a global bond sale of up to $1.5 billion, possibly its last offshore debt issue this year, as it seeks to complete early its foreign borrowing needs before interest costs rise.

The government said in a statement it has hired 6 banks for the global bond issue, with Goldman Sachs and HSBC as joint global coordinators and bookrunners.

Four other banks—Deutsche Bank, Citigroup, JP Morgan and UBS—are joint bookrunners for the global bond issue expected to be launched "in the near future," the government statement said.

A government source told Reuters the global bond was likely to be issued later in the day.

Pricing for the 15-year bond was indicated in the 5.625% area, said a report by IFR, a unit of Thomson Reuters.

Ratings

Credit agencies Standard & Poor's and Fitch Ratings gave a BB senior unsecured debt rating, with a stable outlook, to the 2026 bond.

The rating is in line with the Philippine sovereign's long-term foreign currency issuer default rating (IDR) of BB.

S&P said "the strength of the Philippines' external balance sheet and favorable growth trajectory support" the credit rating. "We could raise the sovereign credit ratings on evidence of material and sustainable structural revenue improvement, or further strengthening of the external balance sheet thus reducing vulnerability to shocks," it added.

Moody's Investors Service also assigned a Ba3 rating on the dollar bond, with a positive outlook.

The bond offer comes just a day after state lender Development Bank of the Philippines raised $300 million in a 10-year bond offer that was over thrice subscribed, and before Indonesia could launch its own global bond sale.

Indonesian officials held investor presentations in Europe and the United States last week for its global bond planned this year.

Samurai bond

Manila is returning to the offshore dollar bond market after a proposed Samurai bond issue was placed under review, with Japan facing a triple disaster from this month's earthquake, tsunami and nuclear crisis.

National Treasurer Roberto Tan told reporters the bond offer may be the last in the offshore debt market this year if it successfully raises the maximum issue size of $1.5 billion.

The offer follows the Southeast Asian government's sale of 25-year global peso bonds in January, which raised $1.25 billion and allowed it to lengthen debt maturities.

The government had set total overseas borrowing this year at $4.5 billion to partly fund its budget deficit and offset weak revenue.

It wants to narrow its fiscal shortfall to 3.2% of gross domestic product this year from 3.7% last year. - With Reuters