The Philippines was named as the “Region’s Best Borrower” in FinanceAsia’s Fixed Income Research Poll 2014 because of the government’s innovative “accelerated one-day switch tender offer” and the concurrent $1.5-billion new 10-year bond issue in the global bond market in January.
FinanceAsia hosted the awards’ gala night to honor the winners in this year’s Fixed Income Research Poll on October 29, coinciding with the Third Annual Borrowers and Investors Forum-Southeast Asia in Singapore.
Under the switch-tender offer in January, the Philippines targeted 11 series of bonds with a notional value of $9.6 billion, wherein investors could choose between switching into the new 10-year bond or tendering for cash. The bonds were tendered through dealer managers, saving time and reducing market-risk exposure for the Philippines
The global investor response to the new 10-year bond issue was nine times oversubscribed, with an order book of approximately $13.5 billion from 500 investors.
The accelerated switch tender offer was the first of its kind conducted in Asia, indicating the Philippines’s sophistication as a sovereign issuer. It also marked the first time since January 2012 that the Philippines went to the international bond market, and the first time since achieving investment-grade status.
The tender offer allowed the country to retire outstanding high coupon bonds and extend the maturity of other outstanding debts. The transaction was followed by a domestic bond exchange in August as part of the strategy to rebalance the domestic portfolio and extend the maturity dates of debts.
In conferring the award, FinanceAsia highlighted the government’s efforts to boost the development of the local capital market by its efforts to promote liquidity and consolidate the debt portfolio.
This was achieved by increasing the volume at auction and the reissuance of outstanding benchmark securities. The success of this strategy is indicated by the year-on-year
decline in the number of outstanding securities and the secondary-market activity of reissued securities. National Treasurer Rosalia de Leon welcomed the award and said: “We are thankful for the recognition given by the international investors’ community in response to our efforts in proactive liability management.
This reflects well on the development of the Philippine debt market and emboldens us to pursue more innovative strategies to manage sovereign debt.”