PH’s success in bond issuances in 2023 underscores strong investor confidence on PBBM watch

The Philippines, through the Bureau of the Treasury (BTr), has efficiently raised funds for economic development through its successful local and international bond issuances in 2023, which underscores strong investor confidence in President Ferdinand R. Marcos, Jr.’s administration.

The country successfully returned to the international capital markets for the first time in January 2023 with the issuance of its USD 3 billion (about PHP 166.98 billion) worth of 5.5-year, 10.5-year, and 25-year US dollar-denominated global bonds, with the latter a part of the Sustainable Finance Framework.

The 25-year sustainable bond offering is the fourth environmental, social, and governance (ESG) bond offering of the Philippines following the USD 2 billion (about PHP 111.35 billion) triple-tranche bond offering in October 2022, the JPY 70.1 billion (about PHP 27.49 billion) four-tranche Samurai bond in April 2022, and the USD 2.25 billion (about PHP 125.25 billion) triple-tranche bond offering in March 2022.

The rate of the 5.5-year and 10.5-year global bonds were priced at 105 basis points (bps) and 145 bps above similar tenor US Treasuries, with a coupon of 4.62 percent and 5 percent, respectively.

The coupon rates are 50 basis points tighter than the initial price guidance of 155 bps area and 195 bps area, respectively.

Meanwhile, the 25-year Sustainability bond was priced at 5.50 percent at par, 45 bps tighter than the initial price guidance of 5.95 percent area.

Before the end of 2023, the Philippines expanded its financing avenues to cater to Middle Eastern and Islamic instrument investors through the issuance of its maiden Sukuk bonds.

This involved leveraging real estate assets under Ijara and Wakala structures, along with incorporating a Commodity Murabaha element.

The issuance, amounting to USD 1 billion (about PHP 55.67 billion) in 5.5-year Sukuk, was priced at 80 bps above US Treasuries, equivalent to a rate of 5.04 percent.

The order book reached a peak oversubscription of 4.90 times. Notably, 30 percent of the certificates issued found buyers among Middle Eastern investors, underscoring the country’s success in tapping the Islamic market.

“The Sukuk issuance is a