Gov’t raises USD 2.75B from dollar bonds

The Philippine government has raised USD 2.75 billion (about PHP 163 billion) worth of dollar bonds, as it returned to the international capital markets for the first time in a year.

The triple-tranche dollar bond issuance was the Philippine government’s largest US dollar deal in over three years, the Bureau of the Treasury (BTr) said. The amount raised was also higher than the initial minimum target amount of USD 1.5 billion.

“The exceptional reception for our first international bond issuance of 2026 demonstrates the trust global investors place in the Philippines. Their response affirms the durability of our economic foundation despite challenging market conditions,” Finance Secretary Frederick D. Go said in a statement.

According to the term sheets, the government raised USD 500 million from the 5.5-year bonds at a coupon rate of 4.25%, about 50 basis points (bps) above the corresponding US Treasury yield (3.847%) but 20 bps below the 70-bp target spread.

The 10-year paper was the largest tranche at USD 1.5 billion. It fetched a coupon rate of 5%, 80 bps above the corresponding US Treasury yield (4.287%) but still 20 bps below the 100-bp target spread.

Lastly, the government raised USD 750 million from the 25-year papers at a 5.75% coupon, also below the 5.9% target.

All three tranches of the global bonds were priced with minimal to no new issue premiums, the BTr said.

“Notwithstanding elevated market volatility and geopolitical uncertainties, the transaction achieved tight pricing, a reflection of the Republic’s standing as a benchmark for high-quality emerging market credit and signals robust investor confidence in the country’s credit strength and long-term development trajectory,” National Treasurer Sharon P. Almanza said in a statement.

The government will use the proceeds from the sale of global bonds for general purposes, including budgetary support.

The government sold the bonds at a minimum investment amount of USD 200,000 and denominations of USD 1,000 thereafter.

The notes will be listed on the Luxembourg Stock Exchange Euro multilateral trading facility (MTF), with the settlement date scheduled for Jan. 27.

BofA Securities, Deutsche Bank, HSBC (B&D), JPMorgan, Morgan Stanley, Standard Chartered Bank and UBS were mandated as joint lead managers and bookrunners for the transaction.

The global bonds, which were drawn from the government’s existing shelf program, were rated “Baa2” by Moody’s Ratings, “BBB+” by S&P Global Ratings, and “BBB” by Fitch Ratings. These ratings are in line with the Philippine government’s issuer rating.

The latest issuance leaves USD 2.55 billion in the government’s USD 5.3-billion foreign borrowing plan for the year.

This is also the Marcos administration’s fourth time tapping the offshore debt market, following a dual-currency issuance of USD 2.25 billion and €1 billion in January 2025, a USD 2.5-billion triple-tranche offering in August 2024, and a USD 2-billion dual-tranche offering in May 2024.

The government was able to time the issuance properly for it to fetch strong demand despite high market volatility, Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said in a Viber message.

“The timing was sensible. Global markets have been constructive recently, giving the Philippines a clean window to lock in funding before uncertainty picks up. Investors were receptive, recent issuances saw strong demand,” he said.

A trader said in a text message that strong demand likewise allowed the government to price the bonds close to the initial guidance.

“Spreads tightened by around 15-20 bps from initial price thoughts, reflecting strong investor appetite despite a volatile global rates backdrop. The final yields were competitive and aligned with market levels, while the quality of demand, particularly from real-money accounts, underscored continued confidence in Philippine sovereign credit.”

Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera likewise said in a Viber message that the strong demand for the bonds is a positive signal of continued investor appetite for Philippine-issued debt, especially amid volatility in global markets and a weak peso.

“Sustaining this demand will depend on fiscal discipline, credible debt management, and clarity on growth prospects. Investors will watch not just yields but how the proceeds are used and how macro policies evolve,” he added.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at PHP 1.647 trillion or 5.3% of gross domestic product this year. Of this, 23% will be raised externally. — Aaron Michael C. Sy, Reporter