PHL sells $1.25B worth of peso bonds in New York

The Aquino administration was able to borrow $1.25 billion or P54.77 billion by selling 25-year peso-denominated bonds Wednesday in New York. According to the Bangko Sentral Pilipinas, the Philippine government took advantage of "favorable market conditions and a low interest rate environment at the start of the year." Tenders for the peso bond float totaled $3 billion, prompting Finance Secretary Cesar Purisima to say it was a testament of investor confidence in the Aquino administration. “We are pleased with the recent offering. We consider it another milestone." The peso bonds maturing in January 2036 were registered with the US Securities and Exchange Commission and were priced at par to yield 6.25 percent, according to the Bangko Sentral’s Investor Relations Office. While denominated in peso, the Philippine bonds will be settled offshore and payable in US dollars at P43.777:$1 conversion rate . “The active investor-participation allowed us to continue our strategy of lengthening debt maturities and reduce exposure to foreign exchange risk," the Finance chief said. The 25-year maturity established a yield curve for this type of instrument and benchmarks for infrastructure loans consistent with the Aquino administration’s public-private partnership initiative. The book-building process attracted over 160 investors. Twenty-one percent of the bonds were allotted to Asian investors, 46 percent to Americans, and 33 percent to Europeans. Asked if government would still be issuing dollar-denominated bonds this year, Purisima said it would depend on market conditions. “We’re continuing to look at the market with opportunistic eyes. When the opportunity is there to do so, we will continue to do so," he said. The Aquino administration will use the proceeds of the bond sale for budget operations and refinancing needs, with 2011 deficit programmed at P290 billion or 2.9 percent of GDP (gross domestic product). Manila hired Citi, Credit Suisse, Deutsche Bank, HSBC, J.P. Morgan, and UBS as bookrunners for the peso bond float. The global peso bond sale is the second floated by the Aquino administration after the $1-billion issued in September 2010. — VS, GMANews.TV