PH sells, swaps $3.2-B worth of 2024 local bonds

Posted at 08/19/2014 2:21 PM | Updated as of 08/19/2014 3:34 PM

MANILA - The Philippines said on Tuesday it has sold and exchanged a total of P140.3 billion ($3.2 billion) worth of new 2024 bonds in a transaction that stretched its average debt maturity profile, the latest in its liability management program.

Over P200 billion worth of existing eligible bonds were offered under the domestic debt swap exercise, but the Treasury accepted only around P122 billion of the eligible debt papers, translating to about P131 billion worth of new bonds, said HSBC, one of the government's deal managers.

Manila also raised around P9.4 billion from the sale of new bonds of the same 10-year maturity, with a coupon rate of 4.125 percent, higher than the PDST-R1 rate of 4.05 percent in the secondary debt market.

With the transaction, the government will save about P1.3 billion  from interest costs in the first year of the debt swap, and the average coupon of bonds accepted in the debt exchange will be stretched by 5.2 years.

"This domestic liability management exercise gave our investors the avenue to exchange illiquid bonds with new benchmark bonds which will trade more efficiently in the debt markets," Finance Secretary Cesar Purisima said in a statement.

HSBC and Land Bank of the Philippines were joint global coordinators, and joint dealer managers for the bond sale along with BDO Capital & Investment Corporation, BPI Capital Corporation , Development Bank of the Philippines and First Metro Investment Corporation.

The Philippines' debt liability program and its preference for domestic debt over foreign borrowing has helped bring down down national government debt to about 49 percent in 2013 from around 55 percent in 2009.

The country's gains in turning around its fiscal position was rewarded with a first ever upgrade to investment grade credit rating by all three major debt watchers last year.