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PHL back in offshore bond market
The Philippines is back in the offshore bond market, with the government raising $2.75 billion in a three-part bond sale. This marks the country’s first international bond offering since the COVID-19 pandemic hit the global economy.
The bond sale was oversubscribed, with demand reaching $12 billion, reflecting investors’ confidence in the country’s economic recovery prospects. The bonds were issued in three tranches: $1.25 billion in 10-year bonds, $1 billion in 25-year bonds, and $500 million in 10.5-year bonds.
The proceeds from the bond sale will be used to finance the government’s budget deficit and support its COVID-19 response efforts. The government has been ramping up its spending to mitigate the impact of the pandemic on the economy, which is expected to contract by 8.5% this year.
The bond sale is a testament to the Philippines’ strong credit profile, which has been affirmed by credit rating agencies despite the pandemic. The country has a BBB+ rating from Fitch Ratings, BBB from S&P Global Ratings, and Baa2 from Moody’s Investors Service.
The Philippines has been a regular issuer in the offshore bond market, tapping it to finance its infrastructure projects and budget deficits. The country has a track record of timely debt payments and has been able to maintain a manageable debt-to-GDP ratio.
The bond sale also reflects the favorable market conditions for emerging market issuers, as investors search for yield in a low-interest-rate environment. The Philippines’ bond sale follows similar offerings from other emerging market issuers, such as Indonesia, which raised $4.3 billion in a bond sale in September.
The Philippines’ return to the offshore bond market is a positive development for the country’s economy, as it provides a stable source of funding for the government’s spending needs. It also signals investors’ confidence in the country’s economic prospects, despite the challenges posed by the pandemic.
In conclusion, the Philippines’ successful bond sale is a testament to the country’s strong credit profile and the favorable market conditions for emerging market issuers. The proceeds from the bond sale will support the government’s COVID-19 response efforts and help finance its budget deficit, providing a stable source of funding for the country’s economic recovery.