Philippines Readies First 2020 Overseas Bond Amid Inflation

22-Jan-2020 Intellasia | Finance | 6:02 AM Print This Post

The Philippines hired banks for a possible euro-denominated bond sale, seeking to keep cost down for its first international debt offering of the year at a time when rising oil prices and volcano eruptions are threatening to push up inflation at home.

The Southeast Asian nation has mandated Citigroup Inc., Credit Suisse Group Inc., Standard Chartered Plc and UBS Group AG to arrange investor calls on January 20. Local debt yields have risen in the past few weeks after inflation surged past economists’ median estimate in December.

“We want to take advantage of the negative interest rate environment” in Europe, Treasurer Rosalia de Leon told reporters in Manila after a domestic debt auction. “We have done an assessment on the appetite. We also want to approach the euro market after the strong demand last year,” she said. A benchmark deal could emerge after the investor calls, she added.

The Philippines traditionally taps the global debt market early in the year to take advantage of favourable pricing on heightened investor demand following limited December supply.

The start of 2020 has been an eventful one in terms of local and external developments. A net oil importer, it saw global crude prices rise recently amid tensions in the Middle East. A volcano 40 miles south of the capital has been erupting since last week, causing damage to property and livelihood in neighbouring towns.

A euro-denominated Securities and Exchange Commission-registered bond offering with a three-year or nine-year tenor, or both, may follow the investor calls, according to people involved in the plan.

Issuance Approval

The sovereign issuer has secured the central bank’s approval to raise as much as $3.7 billion from external commercial sources for 2020, Governor Benjamin Diokno said earlier this month.

The Philippines has been diversifying its funding sources to support a $170 billion infrastructure spending programme through 2022. De Leon said government is assessing the possibility of selling a dollar bond during this quarter.

In 2019, it became the first emerging-market sovereign to tap the global market for that year with $1.5 billion sale of 10-year bonds. This was followed by fresh borrowings denominated in the euro, Chinese yuan and Japanese yen.

(Updates with Treasurer’s comments in third paragraph.)

–With assistance from Clarissa Batino.

To contact the reporters on this story: Ditas Lopez in Manila at [email protected];Siegfrid Alegado in Manila at [email protected]

To contact the editors responsible for this story: Cecilia Yap at [email protected], ;Andrew Monahan at [email protected].net, Ken McCallum, Finbarr Flynn

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Category: Philippines

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