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| Republic of the Philippines | |
| Size | $1.5 billion and Ps30.8 billion new global peso notes |
| Joint global coordinators | Credit Suisse, Deutsche Bank, HSBC |
| Joint bookrunners | Citi, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley, Standard Chartered, UBS |
| return to the Asia Deals of the Year index | |
The improved economic performance of the Philippines has been one of the stories of the past year in Asia Pacific. On October 29, Moody’s Investors Service upgraded the Republic of the Philippines to Ba1 from Ba2 as a result of its continued fiscal revenue strength in the face of deteriorating global demand and its decent growth prospects over the medium term. The Philippines debt portfolio has become longer in tenor, its new-issue yield has decreased and its foreign-currency-denominated bonds are receiving a substantial bid from onshore investors.
In response to its newly found relative economic stability, the government of the Philippines decided to adapt its debt portfolio to rebalance external liabilities, increase reliance on domestic financing sources, extend debt maturities and reduce debt-servicing costs. The joint global coordinators on the deal – Credit Suisse, Deutsche Bank and HSBC – devised a two-fold liability management strategy that was designed to deliver these goals. On November 8, the Republic launched a tender offer for 15 series of notes maturing from 2014 to January 2014 at fixed spread pricing and maximum cash spend of $1.5 billion. The total amount of bonds tendered over the six-day offer period reached more than $3.8 billion. Cesar Purisima, finance secretary of the Philippines, says the transaction gave global investors the opportunity to participate in the growth story of the Philippines. “We are rebalancing the republic’s external liabilities to reduce exposure to exchange rate risks,” he says. “We believe this rebalancing, in turn, will help position the country for further positive ratings action by the credit rating agencies.” Rosalia de Leon, finance undersecretary, adds: “The exercise will also reduce interest costs, avoid bunching up of maturities and extend the duration profile of the republic’s outstanding debt portfolio.”
Also on November 8, the joint global coordinators successfully priced Ps30.8 billion ($759 million) of 10-year 3.9% global peso notes. The order-book gained early momentum and was oversubscribed within the first few hours, allowing the bookrunners to tighten price guidance.
