MANILA, Philippines – The Philippines is increasing commercial borrowing both locally and abroad to take advantage of abundant liquidity and relatively low interest rates.
The Treasury Office on Tuesday April 20 allocated all of the 35 billion pesos in new seven-year bonds at an auction with a coupon rate of 3.625%, a rate slightly lower than the prevailing yields for securities of comparable debt on the secondary market.
Investors offered 90.4 billion pesos for IOUs maturing in April 2028, making the auction almost three times oversubscribed.
National Treasurer Rosalia de Leon attributed the “healthy” auction to “high demand”.
De Leon said the Treasury would sell an additional 25 billion pesos of new T bonds through its tap facility window, a larger volume offered over-the-counter compared to previous taps.
The Treasury “was taking advantage of liquidity, and that is maturing,” De Leon said.
Last Monday, the Treasury also sold an additional 5 billion pesos of 364-day Treasury bills to 11 market makers eligible for government securities (GSED) through the tap.
Regarding the planned sale of bonds in euros, the information sessions underway to investors would have raised good signs of interest.
Debt Monitor S&P Global Ratings has assigned a “BBB +” rating to the Philippines’ upcoming Euro bond issue.
S&P said the Philippines was considering a “benchmark size” issue or about $ 500 million of bonds.
The Philippines was optimistic about exploiting the euro debt market due to its stable and historically low benchmark rates.
As Philippine government bond spreads remained squeezed, officials wanted to stretch the curve.
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