Philippines may tout benchmark retail dollar bond offer in April

THE Philippines is planning a benchmark-sized retail US dollar bond offer with the schedule likely to be announced next month, Finance Secretary Benjamin Diokno said, as the government boosts infrastructure spending.

The announcement will be made in Washington and the target size determined later, he added in a mobile-phone message on Monday (Mar 27). Diokno will be part of the Philippine economic team slated to have a briefing in Washington in April to discuss the government’s spending priorities, and fiscal and infrastructure programmes, among other issues.

A benchmark-sized offering is often understood to mean at least US$500 million. In this case, the exact size remains to be determined. 

Diokno said in an October interview that the government was aiming to capture around 10 per cent of remittances, or at least US$3 billion, for the US dollar bond sale that is typically issued onshore.

The planned borrowing will be the first US dollar-denominated bonds targeting individuals and other retail investors under the administration of President Ferdinand Marcos Jr, who assumed office last June. 

The 2023 national budget, pegged at 5.3 trillion Philippine pesos (S$130.4 billion), aims to prioritise infrastructure development, along with agriculture and education.

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For the past two decades, the South-east Asian nation has raised a big chunk of its finances by tapping retail investors, but previous issuances were mostly in Philippine pesos. In February, the government raised around US$5 billion in local-currency bonds marketed to retail investors. 

In October 2021, the Philippines sold its inaugural retail US dollar bonds, worth about US$1.6 billion. Of the two-part issuance, the 10-year notes pay a coupon of 2.25 per cent, while the five-year bonds pay 1.375 per cent a year. BLOOMBERG