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Euromoney’s borrower awards 2007 |
| Overall awards | |
| Best sovereign/supranational/agency borrower | Best bank borrower |
| Best insurance borrower | Best ABS |
| Best CDO borrower | Best covered bond issuer |
| Best corporate borrower | Best high-yield/leveraged finance borrower |
| Latin America regional awards | |
| Best sovereign borrower | Best corporate borrower |
| Best financial borrower | |
| Central & Eastern Europe regional awards | |
| Best sovereign borrower | Best corporate borrower |
| Best financial borrower | |
| Asia regional awards | |
| Best sovereign borrower | Best corporate borrower |
| Best financial borrower | |
| Middle East and northern Africa regional awards | |
| Best borrower | |
The year began in spectacular fashion. In a similar way to 2005, the Republic of the Philippines hit the market with a large benchmark issue in early January 2006 that went a long way towards fulfilling the government’s full annual funding target as well as capitalizing on the previous year’s highly successful campaign to improve the visibility, size and transparency of the government’s funding process.
The single-tranche $1.5 billion bond extended the Republic’s maturity to 25 years in benchmark size. With a coupon of 7.75% and an issue price of 98.641%, the bond was priced at 333.5 basis points over the equivalent US treasury.
“This was the lowest coupon the Republic has ever printed,” says Mark Leahy, head of Asian debt syndicate at Deutsche Bank, one of the four book runners, “amazing given that this was a long bond. Timing, as always, was impeccable, the Republic has become very good at spotting the ideal market opportunity.”
The government followed up the January bond with a well-executed $750 million tap in July of two existing bonds – a $300 million reopening of the January 2016 bonds, priced at 246.4 basis points over equivalent US treasuries, and a further $450 million of January’s $1.5 billion 25-year bond. The aftermarket trading of the bond had tightened sufficiently for bookrunners Citi, Deutsche Bank and JPMorgan to price the reopening at just 262.4bp over the US treasury benchmark, testament in part to the renewed strength of the Republic of the Philippines as a credit.
“The tap was the first emerging market deal globally to reopen the market after the second-quarter meltdown of May and June,” says Leahy. “It was all done in 24 hours and was very well received. It didn’t really touch the sides.”
An outstanding year was completed with a $774 million exchangeable offer launched by Goldman Sachs and JPMorgan, to smooth out debt maturities. The bond, with an 18-year maturity, featured a three-year stepped amortization from 2022 and took out a number of soon-to-mature bonds.
“No one likes to see bunching maturities,” says a banker familiar with the deal. “A lot of banks had pitched the idea of an exchangeable to the Republic: it helped to take a lot of the short-dated lumpy issues off the front.”
After such a successful year in the markets, the resignation of treasurer Omar Cruz in May 2007 came as an unpleasant shock to the market. Cruz is the architect of the Philippines’ transformation from borrower of necessity to issuer of choice, and his unexpected departure caused some nervousness among investors.
“The market sold off about 10 basis points initially,” says a debt syndicate head, “but it’s since traded back. That’s because the market’s asking itself: is it really likely to go wrong in the short term? There’s so much strength in the underlying economy and the credit base is now so deep that they’d have to do something really dumb to mess it up.”
