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PH Government Ventures to Samurai Bonds

    MANILA, Philippines — The Philippine government successfully raised 70.1 Billion JPY or nearly 29 Billion PHP after venturing into the Samurai market with a multi-tranche offering of 5, 7, 10, and 20 years in the previous month. All four tranches include an Environmental, Social, and Governance (ESG) label which entails that proceeds of the bonds will be used towards financing government projects on climate mitigation and adaptation.

    This is the country’s second entry into the international capital market in 2022 following its issuance of a triple tranche Sustainability Bond in the USD market despite the bond market’s volatility due to the geopolitical tensions in Russia and Ukraine; rising interest rates hiked by central banks; and the surprise decline of the Yen after 2 decades.

    The shortest tranche of a 5-year bond is valued at 52 billion yen, the 7-year bonds are priced at 5 billion yen, the 10-year bonds amount to 7.1 billion yen, and the largest tranche of 20-year bonds is estimated at 6 billion yen. Undersecretary Mark Dennis Joven mentioned that this transaction “marks the first long-tenor Samurai offering of the Republic.” 

    In a recent press release, Department of Finance Secretary Carlos Dominguez said, “This successful bond offering of the Republic underscores the continued support of the international investor community for the strategic sustainability objectives of the Duterte Administration, particularly its efforts to mobilize capital from ESG-conscious investors to accelerate the transition to a more sustainable and climate-resilient economy.

    Meanwhile, National Treasurer Rosalia De Leon said that the Samurai transaction “demonstrated the Republic’s ability to price tighter than current secondary levels and extend the maturity to the long end of the curve” despite uncertainties in the market and geopolitical tensions. 

    The deal was managed by SMBC Nikko Securities, and Mitsubishi UFJ Morgan Stanley Securities.

    The government has proposed a  2.2 Trillion PHP budget for borrowing programs for 2022. In a report released by Inquirer, De Leon remarked that the possibility of utilizing green bonds as a larger source of foreign financing is a decision the government must still decide on.

    by: Noelle Azarcon

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