The Republic of the Philippines (RoP) accessed the international debt capital markets for the second time this year as it priced on April 21 a triple-tranche euro bond transaction totalling 2.1 billion euros (US$2.53 billion) – its largest-ever fund raising in the euro bond market.

The US SEC-registered deal comprised of a four-year tranche amounting to 650 million euros, which was priced at 99.509% with a coupon of 0.25% to offer a yield of 0.374%. This was equivalent to a spread of 75bp over mid-swap. The second tranche was for 12 years amounting also to 650 million euros, which was priced at 99.468% with a coupon of 1.20% and a re-offer yield of 1.248%. This represented a spread of 105bp over mid-swap. The final tranche was for 20 years amounting to 800 million euros, which was priced at 99.050% with a coupon of 1.75% to offer a yield of 1.807%. This was equivalent to a spread of 135bp over mid-swap.

All three tranches tightened by 25bp from their initial price guidance on the back of strong order book, which enabled the sovereign to revise the price guidance twice across all tranches. The 20-year bond is the longest-ever tenor achieved by the RoP in the euro bond market as well as the largest single euro bond tranche. “The ability to stretch our maturities to the 20-year tenor at tight pricing underscores that investors are, indeed, taking a long view on our return prospects,” says national treasurer Rosalia de Leon.

The euro bond issuance follows the RoP’s foray in the Samurai bond market in March this year in which it raised a three-year zero-coupon offering amounting to 55 billion yen (US$509 million). The sovereign previously tapped the euro bond market in January 2020 in which it printed a dual-tranche deal totalling 1.2 billion euros, equally split at 600 million euros each. The three-year tranche of that transaction was the first-ever zero-coupon euro issuance by the RoP in the international debt capital markets.

Commenting on the latest deal, Finance Secretary Carlos Dominguez III says “the RoP’s successful return to the international capital market for the second time this year reflects the investor community's confidence in the country's prospects for a strong recovery from the prolonged pandemic, given that its financial readiness has allowed the government to do whatever Covid-19 response measures are necessary to save lives and revive the economy."

Proceeds of the issuance will be used for general purposes, including budgetary support. BNP Paribas, Credit Suisse, Goldman Sachs, J.P. Morgan, Nomura and Standard Chartered acted as the joint bookrunners and lead managers for the transaction.