The Development Bank of the Philippines (DBP) returned successfully to the international debt capital market this month with the refinancing of its 10-year US$300-million bonds that were priced at even tighter spreads over the United States (US) Treasuries than when these notes were first offered to global investors in 2011.
JP Morgan, who was among the joint lead managers and bookrunners of the offering, reported to Finance Secretary Carlos Dominguez III that the bond refinancing tightened DBP’s spread over the US Treasuries to T10+97.5 basis points, from T10 + 225 bps in 2011.
The DBP raised US$300 million from its global bond offering in 2011. The DBP refinanced the notes, which are set to mature on March 25 this year.
JP Morgan said DBP and the Philippine government were able to score “another big win” with the bond refinancing last March 2, “despite a volatile past week on the back of weaker equity markets and large US Treasury rate swings.”
DBP’s offering last March 2 was the first US dollar-denominated bond sale by a Philippine issuer and the first US dollar senior public bond issuance from a Southeast Asian bank this year.
It also marked DBP’s return to the international debt capital market since its previous bond issuance in 2011.
JP Morgan said the transaction saw strong demand from real money fund managers and achieved a 27.5 bps revision from the initial price guidance.
“While investors had initially exhibited price sensitivity due to the volatility in rates, the transaction was eventually priced at T+97.5 bps to yield 2.421 percent, which represents a premium of approximately 32.5 bps over the implied fair value of the Philippine sovereign at the time of issuance,” JP Morgan said.
DBP’s spread over the implied fair value of ROP (Republic of the Philippines) bonds was 95 bps in 2011.
JP Morgan said DBP “was able to time the market and capitalize on the stronger market backdrop” to launch its global roadshow on March 1 and subsequently price a successful transaction the following day.
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