By Joann Santiago
MANILA, Sept. 8 (PNA) — The Philippines’ recent debt exchange activity got a strong response from holders of government securities (GS), enabling the government to swap PhP 237.6 billion worth of bonds due in 2025 and 2040.
In a statement, the Department of Finance (DOF) said total tenders of eligible bonds amounted to PhP 288 billion, the bulk of which amounting to PhP 254 billion are accounted for by the 25-year bond while tenders for eligible 10-year bonds reached PhP 134 billion.
Minimum coupon rate of the 10-year bond stood at 3.625 percent while it is 4.625 percent for the 25-year bond.
This activity lengthened the average maturity of the accepted and swapped bonds to 10.7 years.
Relatively, the government issued about PHP 9.6 billion worth of 10-year bonds, which received total subscription of PHP 21 billion.
Minimum issue size was set at PHP 50 billion per tranche but the government got over-subscription of 3.88 times the total transaction.
After the exercise, the government was able to establish new benchmark bonds amounting to PHP121 billion for the 10-year bond and over PHP142 billion for the 25-year bond.
DOF said the debt exchange, which is part of the government’s liability management program, will result to Php 2.4 billion interest expense savings for the government a year after this exercise.
The savings, it said, “can be used by the Republic for initiatives that will help sustain the country’s impressive growth record.”
Finance Secretary Cesar Purisima said this activity “helped the Republic achieve its debt management objectives while also providing investors with new benchmark bonds in exchange for illiquid bonds.”
“Amid turbulence around the world, the overwhelming response we received from the market is an unequivocal show of strength and stability on the part of the Republic,” he said.
”With the introduction of two tranches of exit bonds this year, the Republic continues to provide innovative solutions in line with investors’ needs,” he added.
Also, National Treasurer Roberto B. Tan said they are “very pleased with the unwavering support from the market.”
”We will continue to work with investors to ensure that the Republic maintains an efficient debt portfolio while achieving competitive funding rates,” he added.
The government tapped BPI Capital Corporation, Citicorp Capital Philippines, Inc., The Hong kong and Shanghai Banking Corporation Limited and Land Bank of the Philippines as Joint Global Coordinators while BDO Capital & Investment Corporation, BPI Capital Corporation, Citicorp Capital Philippines, Inc., Deutsche Bank AG, Manila Branch, Development Bank of the Philippines, First Metro Investment Corporation, The Hong kong and Shanghai Banking Corporation Limited, and Land Bank of the Philippines were tapped as Joint Deal Managers on this exercise.
Offer period for the debt swap started 2pm last August 26 and lasted until 4pm of September 4.
The government got a maximum authority of Php 300 billion for the exchange.
Before this exchange, the previous debt swap activity of the government was in August 2014 wherein about Php 140 billion worth of bonds were swapped. (PNA)