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Philippines to raise $750 million Bonds
The 10.5-year bonds, (they mature on January 20, 2020, in order to stagger the government's repayment obligations) were at 100.25 by the close of Asian trading yesterday after being re-offered at 99.065. The bonds were priced with a coupon of 6.5%, which at the re-offer price gives a yield of 6.625%. This corresponded to the tight end of the initial yield guidance of 6.625% to 6.75% that was set by the three bookrunners early on during marketing. The guidance was firmed up in the early evening Hong Kong time, when investors got the message that the final yield would be fixed at 6.625%.
The Philippines returned to the Asian bond market on Monday to raise another $750 million towards its gaping budget shortfall, and as expected, investors rallied around and allowed it to price tight. The offering was supported by a significant rally in US equities during the final hours of marketing, which gave investors the confidence to buy despite a sharp contraction in credit spreads over the past few months. It also helped that the sovereign set clearly defined terms which it stuck to throughout the marketing. During the final few hours of the bookbuilding investors even had a fixed yield as a reference point for their investment decisions. "It went out with a finite size and well-defined terms and it didn't move the goal posts. But the tight pricing was also possible because of the deep domestic investor base," said a source close to the offering, who noted that it was primarily the local investors who were driving up the price in the secondary market yesterday too.read source article