Govt seeks $500M through global bonds

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The national government is seeking to generate $500 million or about P24 billion by offering its first global bonds this year.

 

The benchmark-sized dollar bonds are dual-tranche with 10.5-year and 25-year tenors, according to the government’s initial guidance. The 10.5-year bonds will be paid off on January 6, 2032, while the 25-year bonds will be paid off on July 6, 2046.

 

With an initial coupon rate of 3.550 percent, the long-term bonds would have a yield of around 90 basis points higher than the 10-year US Treasury benchmark.

 

The proceeds from the offering, according to National Treasurer Rosalia de Leon, will be utilized for general purposes, including budgetary support for the government.

 

S&P Global Ratings, Moody’s Investors Service, and Fitch Ratings are expected to give the bond an investment-grade rating.

 

The government raised $2.75 billion (about P132.13 billion) through its last double-tranche global bond issue in 2020 in December.

 

The national government has set a gross borrowing program of P3.035 trillion for fiscal year 2021, according to the Department of Budget and Management’s Budget of Expenditures and Sources of Financing. This is more than the P2.74 trillion gross financing in 2020.

 

Commercial borrowings were programmed at $7 billion, de Leon added. The government has so far raised $3 billion from the sale of samurai and euro bonds.

 

Based on the latest cash operations report of the Bureau of the Treasury, the government received P121.96 billion and P24.18 billion from the sale of euro and samurai bonds, respectively, as of April this year.

 

BY MEYNARD DELA CERNA

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