Retail dollar bond sale may exceed USD1B

The government’s retail dollar bond (RDB) sale will likely exceed USD 1 billion amid strong demand, the Bureau of the Treasury (BTr) said.

“We’re seeing the demand, we’re close to the USD 1 billion initially that we targeted. We are confident that until next week we’ll be able to raise more than USD 1 billion,” BTr Officer-in-Charge Sharon P. Almanza said in a briefing on Friday.

The government on Wednesday raised USD 611.2 million from the auction of its onshore retail dollar bonds. The minimum issue size of the offer was set at USD 200 million.

This is the Philippines’ second retail dollar bond issuance, but the first under the Marcos administration. In 2021, the Philippines raised USD 1.6 billion from its maiden retail dollar bond offering.

Finance Secretary Benjamin E. Diokno said on Friday that it is possible to upsize the offer due to the high demand.

“Actually, the initial offering was USD 200 (million), because we really wanted to limit our indebtedness. But you know, demand is close to a billion as of (Friday)… and maybe we can even raise (the size) because this bond is considered domestic, so that’s okay. We have some leeway in domestic borrowing,” he said in mixed English and Filipino.

Ms. Almanza noted the government has not completed its domestic borrowing program this year, “so we can still accommodate even if we reach the USD 1 billion during the offer period.”

The government is planning to borrow PHP 2.207 trillion this year. Broken down, this consists of PHP 1.654 trillion from domestic sources and PHP 553.5 billion from foreign sources.

In the first seven months, gross domestic borrowings reached PHP 1.17 trillion, data from the BTr showed.

Ms. Almanza said the government may possibly cut short the offer period for the bond offering. “As we said during the launch, it’s possible that we may (cut), but for now, there is no plan to,” she said in mixed English and Filipino.

The offer period for the RDBs started on Sept. 27 and is scheduled to end on Oct. 6. The issue date is on Oct. 11.

The five-and-a-half-year bonds fetched a coupon rate of 5.75%. It was also awarded at rates ranging from 5% to 5.75%, bringing the average to 5.509%. The bonds are also payable every quarter until its maturity on April 11, 2029.

Sukuk bonds
Meanwhile, the government is planning to launch Sukuk bonds before the end of the year.

“We’ll go back to the Middle East to sell our Sukuk bonds. At the end of November,” Mr. Diokno said.

The offer size for the bonds is “more or less, initially USD 1 billion,” he added.

Ms. Almanza said that the minimum denomination for the Sukuk bonds is at least USD 200,000.

Mr. Diokno noted that these are not retail bonds and will mainly be for institutions.

“As of today, we have chosen our lead managers, six. So I think that will complete our borrowing,” he added.

Also Mr. Diokno said that the government’s planned Euro bonds will likely be launched by next year.

“We were going around, there is demand for Euro bonds,” he added.

In April 2021, the government raised €2.1 billion from a triple-tranche offering of euro-denominated bonds.