The government has advanced its plan to offer the country's first sale of sukuk or Islamic bonds through investor calls in several countries by authorized banks, the Bureau of the Treasury, or BTr, said Monday.

Citigroup, Deutsche Bank, Dubai Islamic Bank, HSBC, MUFG and Standard Chartered Bank were appointed by the government as joint bookrunners and lead managers for the bonds.

The BTr said the banks started gauging investor demand by conducting investor calls in Asia, Europe, Middle East and the United States beginning yesterday.

The US dollar-denominated sukuk bonds have a 5.5-year tenor which is subject to market conditions. The bond issuance will be administered by the Land Bank of the Philippines — Trust Banking Group.

"This will potentially be the Republic's maiden sukuk issue after conducting a Philippine Economic Briefing in Dubai last September, with a target of diversifying the investor base towards Middle Eastern and Islamic countries," the BTr said in a statement posted on the Department of Finance's website.

Economic surge a leverage

The government aims to raise $1 billion from the Islamic bond issue and boasts of a stable outlook for the Philippines based on global credit ratings, specifically Baa2 by Moody's, BBB+ by S&P and BBB by Fitch.

"A suspension, reduction or withdrawal of the ratings assigned to the certificates may adversely affect the market price of the certificates. The significance of each rating should be analyzed independently from any other rating," the BTr said.

The sukuk bond issuance follows the second tranche of retail dollar bonds in September where the government raised $1.26 billion at 5.75 percent interest rate.

Finance Secretary Benjamin Diokno told the media the government does not need much from the retail dollar bonds as it has yet to accommodate demand for sukuk bonds to be launched before the end of this year.

The sukuk bond offer is subject to certain legal terms of foreign countries.

"No public offering is being made in the United States or in any other jurisdiction where such an offering is restricted or prohibited or where such offer would be unlawful prior to registration or qualification under the securities laws of such jurisdiction," the BTr said.

The BTr added the bond issuance does not intend to violate Islamic law.

"Certificate holders should conduct their own due diligence and consult their own Shariah advisers as to whether the proposed issue and the trading of the certificates (including on the secondary market) is in compliance with Shariah principles for their own purposes," the government agency said.

The Marcos administration aims to raise $5 billion from domestic and external commercial borrowings this year.