TOKYO—Five of Japan’s leading financial institutions have given their full backing to the Philippines’ first stand-alone yen-denominated “Samurai” bonds issue set in the third quarter of this year, according to the Department of Finance (DOF).

In separate meetings with Finance Secretary Carlos Dominguez III here, top officials of Japan’s five largest banks—the Mitsubishi UFJ Financial Group, Nomura Holdings Inc., Mizuho Bank Ltd., Sumitomo Mitsui Banking Corp. (SMBC), and Daiwa Securities Group Inc.—said they expect strong demand for the Philippines’ “Samurai” bond float, the first since the last one issued in 2010.

The “Samurai” bond issue planned for either September or October this year is also the first one to be issued by the Philippine government without any guarantee from a Japanese institution.

In 2010, when the government raised funds through the float of “Samurai” bonds, the Japan Bank for International Cooperation (JBIC) guaranteed the bond issue through its Market Access Support Facility, which was established to assist Asia’s developing countries in accessing international capital markets following the global financial crisis of 2008.

Since 1978, the Philippines through private banks floated bonds in the Japanese market with seven Samurai bond issues. The eighth in 2010 was issued by the Philippine government with JBIC support.

The ninth bond issuance set this year with no guarantee fees involved would mean lower financial costs for the Philippine government.

In their meeting with Dominguez, officials of MUFG led by its president and CEO Saburo Araki said there is “strong confidence in the Philippines now and into the future” among Japanese investors.

“We are extremely supportive of the bond issue …We are very excited and pleased for the inauguration or possible issuance,” Araki said.

Araki also cited the good relationship between Japan Prime Minister Shinzo Abe and President Duterte as a positive factor in winning investors for the “Samurai” bond issue.

MUFG, which is among the leading institutions when it comes to project financing, would also like to get involved in the Philippines’ “Build, Build, Build’ program, Araki said, as he believes that “infrastructure development is a key for the future success of the Philippines.”

Dominguez said the Philippines would like to maintain the tight spreads for its offshore bond issuances, pointing out that when the government issued $2 billion-worth of 10-year dollar denominated bonds in January, its spread was 37.8 basis points (bps) over the US Treasuries, while its maiden “Panda” bond float of 1.46 billion renminbi in China last March had an even tighter spread of only 35 bps over the benchmark.

He also informed Japanese bank officials during his meetings with them that the Duterte administration made sure that the government was on solid financial footing before embarking on a massive infrastructure buildup by first raising revenues through its tax reform program and running after tax evaders.

“We are now confident that our infrastructure program has enough capital for it. We are not going to be relying solely on debt to finance it,” Dominguez said.

Nomura Holdings, led by its president Koji Nagai, told Dominguez that the bank has an exemplary track record in selling “Samurai” bonds and would strive to maximize the Philippines’ issue and “capture the most favorable conditions.”

Tatsufumi Sakai, the Group CEO of Mizuho, cited the Philippines’ recent investment-level ratings upgrades, its strong economy and young skilled workforce as plus factors for the “Samurai” bond issuance and the continued interest of Japanese investors in the country.

“Not only the government, but also the private sector wants to invest in your country…By collaborating government and private sector partnership we can do a lot,” Nagai said.

Daiwa CEO Seiji Nakata assured Dominguez, meanwhile, of the institution’s support for the “Samurai” bond issue. “We are right behind you, so no need to worry,” Nakata said during his meeting with the finance chief.

“We can expect a strong demand. And of course, now the investors are looking for places to invest. Now for samurai bonds, there will be strong demand,” Nakata said.

SMBC president and group CEO Takeshi Kunibe said the “strong leadership” in the Philippines and the “expansion of the Philippine economy” has made the country “very popular among Japanese investors.”

Kunibe said SMBC, which was also among the organizers of the Philippine Economic Briefing (PEB) held at the Imperial Hotel here, said the bank is also looking forward to “a successful deal” on the Philippines’ “Samurai” bond issue.

The PEB, which laid out the Duterte administration’s plan to sustain the Philippines’ status as one of the fastest-expanding economies in Asia and its programs for inclusive growth, also “set the groundwork” for the deal roadshow that the government will roll out for its “Samurai” bonds issue, according to Dominguez.

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