The Republic of the Philippines Successfully Prices 3- and 9-Year EUR-Denominated Global Bonds

Finance Secretary Carlos Dominguez III said, “The overwhelming response from the market for this landmark transaction underscores the international investor community’s deepening confidence in the Philippine economy amid the reforms put in place by the Duterte administration to sustain the country's high and inclusive growth in the face of the current geopolitical headwinds.”

The Republic of the Philippines (the "Republic") successfully priced its first international bond issuance in 2020 with its total offering of EUR1.2 billion 3- and 9- year Global Bonds. The Bonds are expected to be rated Baa2 by Moody’s, BBB+ by Standard & Poor’s, and BBB by Fitch*. The Notes are expected to settle on February 3, 2020.

This offering is a landmark transaction for the Republic having priced its lowest coupon EUR issuance as well as its first-ever zero-coupon EUR issuance in the international capital markets. The overwhelming reception from the market allowed the pricing guidance for the Global Bonds to tighten both tranches by 25 bps to 3Y EUR Midswaps +40 bps and 9Y EUR Midswaps +70 bps after being revised from an initial pricing guidance of 3Y EUR Midswaps +65 bps area for the 3-year bonds and 9Y EUR Midswaps +95 bps area for the 9-year bonds, respectively. Moreover, the 3-year bonds allowed the Republic to price its first zero coupon bond in the EUR markets and even price its tightest coupon in history for a EUR transaction.

For the 3-year EUR600 million zero-coupon Global Bonds, by geographical allocation, 16% of the bonds were allocated to Asia ex-Philippines, 4% to Philippines, 26% to the United Kingdom, 13% to Germany, 12% to France, 5% to Italy, 10% to other European investors, and 14% to the U.S. In terms of investor type, 68% went to Asset and Fund Managers, 22% to Banks, 4% to Central Banks, Pension Funds and Sovereign Wealth Funds, 3% to Insurance, and the remaining 3% to Private Banks and Others.

On the other hand, for the 9-year EUR600 million 0.700% Global Bonds, by geographical allocation, 16% of the bonds were allocated to Asia ex-Philippines, 6% to Philippines, 31% to the United Kingdom, 15% to Germany, 6% to France, 13% to Italy, 8% to other European investors, and 5% to the U.S. In terms of investor type, 54% went to Asset and Fund Managers, 18% to Banks, 3% to Central Banks, Pension Funds and Sovereign Wealth Funds, 24% to Insurance, and the remaining 1% to Private Banks and Others.

Finance Secretary Carlos Dominguez III said, “The overwhelming response from the market for this landmark transaction underscores the international investor community’s deepening confidence in the Philippine economy amid the reforms put in place by the Duterte administration to sustain the country's high and inclusive growth in the face of the current geopolitical headwinds.”

“Credit for this successful issuance of the Republic’s lowest and first ever zero-coupon EUR Global Bonds in the international capital markets must go to President Duterte for his unwavering support for the economic management team, the Department of Finance (DOF) and Bureau of the Treasury (BTr) professionals, and our bankers,” he added.

Dominguez further said, “The issuance of these Euro bonds form part of the government's efforts to diversify funding sources for its unmatched investments in infrastructure and human capital development to sharpen the country's global competitiveness, generate investments and jobs, eradicate poverty and achieve financial inclusion for all law-abiding Filipinos.”

Proceeds of the issuance will be used for the Republic's general government purposes, including budgetary support.

National Treasurer Rosalia de Leon commented, “The offering garnered significant demand from high quality accounts which allowed us to price a record low EUR coupon for the Republic. The successful transaction allowed us to diversify our funding program and minimize our funding costs to support productive spending for infrastructure and social services.”

In addition, Finance Undersecretary Mark Joven further pointed out that “The Republic was really able to capitalize on the strong reception received from a wide range of investors in order to price this landmark transaction. As we pursue our record borrowing plan for 2020, the Republic hopes to sustain this momentum and confidence from investors for future offerings.”

UBS acted as sole global coordinator, joint lead manager, and joint bookrunner for the transaction. Citi, Credit Suisse, Standard Chartered Bank, and UBS acted as joint lead managers and joint bookrunners.

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