Investor support manifests

Investor support from the global business community proved solid for the country’s continued growth story in 2018.

This was learned from the Department of Finance (DoF) on Wednesday from Finance Secretary Carlos Dominguez III who said the tight spreads on bond issuances such as the $2 billion 10-year global bonds in January 2018 only highlighted the government’s sound fiscal management.

Dominguez particularly noted the 35-basis point spread over the three-year benchmark on the RMB 1.46 billion panda bonds sold in March last year even as the yen-denominated samurai bond market allowed for a 34.7-basis point spread over the benchmark after the Philippines stayed away for eight years prior.

With the positive market response in both the samurai and panda bond sales, Dominguez hinted of the possibility of establishing a regular presence in these markets every 12 to 18 months.

The Finance chief also ordered National Treasurer Rosalia de Leon to move the proposed bond issuances ahead of schedule amid global uncertainties driven by the US Fed’s decision to hike its policy rates.

“Because of all the announcements and all the uncertainties that are going to start hitting more, impacting the market more, (it’s) better to bring the issuance forward earlier,” Dominguez said.

He then reiterated the policy of not keeping away from the markets for a prolonged period as participation will help diversify the government’s borrowing strategy in pursuit of the massive “Build, Build, Build” infrastructure buildup program.

In addition, the China Lianhe Credit Rating Co., Ltd. gave the country a favorable AAA rating as Manila became the first country in the region to issue panda bonds that contributed in boosting investors’ interest as well as lowering bond yield.

According to the rating agency, the government’s 10-point socioeconomic agenda, which include the first tranche of the ongoing comprehensive tax reform, will help the Philippines achieve a quicker and equitable economic growth in the succeeding years.

In addition, the Duterte administration’s stable source of payment from higher revenue collection further contributed to the positive credit rating assessment.

With demand on the country’s panda bond sale, the exercise attracted 90 percent offshore buyers, a record, that pushed the coupon rate to a record-low of five percent.