STATE DEVELOPMENT The Bank of the Philippines (DBP) has sold $ 300 million of global 10-year bonds to refinance its current bonds which mature this month, the Department of Finance (DoF) said on Wednesday.
The DoF said in a press release that the bond refinancing offer was valued at the current 10-year US Treasury bill rate plus 97.5 basis points (bps), lower than the previous rate of plus 225 bps when the titles were Fifirst offered in 2011. The release cites a report from JPMorgan, which was among the joint leaders and bookkeepers of the transaction.
DBP’s debt securities were valued on March 2 following a world tour the day before. The supply received strong demand, according to the JPMorgan report.
“While investors initially exhibited price sensitivity due to rate volatility, the transaction was ultimately valued at T + 97.5bp for a return of 2.421%, which represents a premium of around 32, 5 bps of the Philippine sovereign’s implied fair value at the time of issue, ”the report states.
The DoF said the offer marked the first sale of dollar-denominated bonds in the country for the year. It was also the first bank in Southeast Asia to tap the global bond market for 2021.
JPMorgan noted that the rate secured was a “big win” for the state-run lender amid high market volatility. Fifinancial markets and huge fluctuations in yields on US Treasuries.
Credit Rating Fitch Ratings last week assigned an expected ‘BBB’ rating to the issue, citing the bank’s’ strategic role, full state ownership, systemic importance as the second largest bank State of the Philippines ”.
The rating was equivalent to the sovereign “BBB” rating of the Philippines, which was affinoted by the Debt Monitor in May.
Last year, DBP raised 21 billion pesos in two-year peso-denominated bonds at a 2.5% coupon.
The bank’s net profit fell 26.69% year-on-year to 3.24 billion pesos from January to September 2020. DBP attributed the decline in profit to increased loan loss provisions under of the coronavirus pandemic. – BM Laforga