Philippines first off mark with $1.5 billion deal

The Republic of the Philippines has once again leaped straight out of the gates to issue Asia's first sovereign bond in 2010. The sovereign raised $1.5 billion on Wednesday through a dual-tranche SEC-registered deal that was jointly arranged by Barclays Capital, HSBC and Deutsche Bank. The 10-year tranche attracted $5.3 billion worth of demand from 215 orders, while demand for the 25-year tranche amounted to $4.6 billion split across 205 orders.

The deal was a reopening of two securities that were initially sold in January and October of last year and comprised $650 million of 6.5% bonds maturing in January 2020 and $850 million of 6.375% bonds maturing in October 2034. The new issuance will bring the total size of these two bonds to $1.4 billion and $1.85 billion respectively.

The 2020s were priced at 106.25% of face value to yield 5.674%, or an equivalent of 183.7bp over US Treasuries. The 2034s were priced at 96.5% to yield 6.664%, or an equivalent of 195.7bps.

The bonds traded softer in the aftermarket yesterday, but were in line with other regional sovereigns on the back of generally weaker sentiment for credit markets and high US Treasury yields. According to market participants, the yield on the 2020s widened by 3bp, while the yield on the 2034s widened by 5bp.

As has been a common theme with these long-dated bonds, US participation was dominant and 35% of the 10-year tranche and 40% of the 25-year tranche was allocated to US investors. There was also strong demand from real money accounts in both the US and Europe.