The Republic of the Philippines (RoP) arranged its second fund raising this year in the international bond market as it priced on April 12 a four-tranche Samurai bond totalling 70.1 billion yen (US$558.30 million). The offering was the first-ever Asean sustainability bond transaction issued by the sovereign in the Samurai bond market, following the previous deal of a 25-year sustainability bond in March amounting to US$1 billion.

The transaction consisted of a five-year deal amounting to 52 billion yen with a coupon of 0.76% – equivalent to a reoffer spread of 60bp over yen swap mid Tokyo overnight average rate (Tona). The second tranche amounting to 5 billion yen was for seven years with a coupon of 0.95%, representing a reoffer spread of 70bp over yen swap mid Tona rate.

The third tranche amounting to 7.1 billion yen has a tenor of 10 years with a coupon of 1.22% and a reoffer spread of 85bp over yen swap mid Tona rate. The final tranche was for 6 billion yen for 20 years with a coupon of 1.83% and a reoffer spread of 115bp over yen swap mid Tona rate.

The RoP managed to achieve a benchmark size for the transaction despite having the five-year as the shortest tenor and the tighter pricing compared with secondary levels. The sovereign also utilized the demand in the long-end by issuing its first 20-year note in the Samurai bond market.

In pricing its first sustainability Samurai bond, the RoP was able to attract new investor accounts and demand from Japanese regional banks and life insurance companies amid the volatile market environment.

Commenting on the deal, finance secretary Carlos Dominguez says the Samurai bond is a testament to the international appreciation of and confidence in the government’s strong commitment to climate change mitigation and adaptation initiatives, and to deepening its domestic sustainable finance market. The transaction also demonstrates the country’s efforts to mobilize capital from environmental, social and governance (ESG)-conscious investors to accelerate the transition to a more sustainable and climate-resilient economy.

SMBC Nikko Securities and Mitsubishi UFJ Morgan Stanley Securities were the joint lead managers for the transaction.

The RoP launched its sustainable finance framework in January this year, laying out the process that will be used to ensure transparency and disclosure of the use of proceeds, as well as the expected environmental and social impact of the eligible green and social projects in line with the international best practices.