The July PHP74.3bn ($1.3bn) three-year and five-year retail treasury bond issues were the fourth such offerings by the Republic of the Philippines. But on this occasion it was done with a difference, as it was the first issue following the Program Mechanics for the Issuance of Peso-denominated Retail Treasury Bonds. This was developed by HSBC to standardise and streamline processes, allowing the Philippines to move swiftly to capture windows of opportunity in the domestic market.
Proper market positioning and timing, a pricing strategy involving the use of an electronic Dutch auction for the institutional bookbuilding, and a distribution strategy involving a subsequent public offering combined to tighten the price significantly through the Republic of Philippine’s outstanding benchmarks. The final pricing saved the Philippines an estimated PHP268m in interest expense for the life ofthe bonds.
With a final issue size of PHP74.3bn, the transaction was the single biggest domestic bond issue in Asia in 2003 and the biggest domestic capital market offering in the Philippines to date.
“This was a ground-breaking transaction. The deal has helped us develop the Philippine capital markets as well as raise low-cost financing for the government at a time when offshore markets were challenging,” said HSBC’s Stephen Williams, head of debt finance group, Asia Pacific.
