Philippines launches 25-year global bond offer

Posted By on January 4, 2012

MANILA, Jan 4 (Reuters) – The Philippines launched a 25-year, dollar-denominated global bond issue of at least $700 million, a source said on Wednesday, as Manila hopes to take advantage of improved investor risk appetite after global markets began the year with a rally.

The exact size of the offer would depend on the bookbuilding process, but the government had planned to sell as much as $1.5 billion of the bonds.

“It will be at least $700 million, or benchmark size. The bookbuilding has started,” the source, who is close to the deal but asked for anonymity due to the market sensitivity of the offer, told Reuters.

The government said in a statement on Wednesday it has mandated Deutsche Bank AG <DBKGn.DE>, Citigroup Inc <C.N>, Credit Suisse Group AG <CSGN.VX>, Goldman Sachs Group Inc <GS.N>, HSBC <HSBA.L>, JP Morgan Chase <JPM.N>, Standard Chartered Plc <STAN.L> and UBS AG <UBSN.VX> as joint bookrunners for the U.S. SEC-registered global bond offer.

Moody’s Investors Service said in a statement it had assigned a provisional rating of Ba2 to the planned global bond, or two notches below investment grade, with a stable outlook, the same as the country’s sovereign rating.

The Philippines is rated one notch below investment grade by Fitch. Standard & Poor’s last month revised its outlook on Philippine debt to positive from stable, but did not raise the rating from two rungs below.

On Tuesday, Rosalia de Leon, head of the Finance department’s international finance group told Reuters in a phone interview that the government would assess the state of overseas markets, particularly in response to the euro zone’s sovereign debt woes, before launching the bond offer.

Stocks and the euro started the year with a sharp rally on Tuesday, boosted by better-than-expected U.S. and European data and hopes the Fed could ease monetary policy further.

Manila has a track record of selling global bonds early in the year to cover bulk of its annual foreign debt requirement and obtain favourable borrowing costs.

In 2011, it sold $1.25 billion in peso-denominated global bonds in the first week of January.