Philippines raises US$7.4b via first Marcos retail bond

THE Philippines raised 420.4 billion pesos (US$7.4 billion) from the first local-currency bond sale to retail investors since Ferdinand Marcos Jr became president.

Tapping into the popularity of the securities, which offer a higher return than bank deposits, the government obtained about 17 per cent of its planned borrowings for this year from offering. Treasurer Rosalia de Leon told reporters she was “very” happy with the result.

The retail bonds due in March 2028 pay a coupon of 5.75 per cent per year.

Retail investors across Asia frequently buy sovereign notes. Indonesia and Hong Kong offer them, while India opened up its government bond market to individual buyers last year.

For the past 2 decades, the Philippines has looked to the general public to raise a big chunk of its finances, with retail bonds typically offered with a denominations of just 5,000 pesos. Institutional investors constitute an additional source of demand.

The first offering under Marcos Jr took place against the backdrop of rising borrowing costs and as governments spend to fund recovery from the Covid-19 pandemic.

Of the total sold, 108.5 billion pesos were switch subscriptions – a record high, the treasurer said. Investors could trade in notes maturing in coming months for the new bond.

Allowing investors to exchange securities “lessens refinancing risk and extends maturity,” she said. BLOOMBERG