INTERNATIONAL credit watchers S&P Global Ratings and Moody’s Investors Service assigned investment grade ratings to the proposed euro-denominated bond issuance of the Philippine government.
In a statement on Tuesday, S&P Global Ratings announced that they have assigned a “BBB+” long-term foreign currency rating to the proposed benchmark-size euro-denominated senior unsecured notes to be issued by the Philippines.
This is parallel to their current rating of the Philippines, which is at BBB+ with a stable outlook.
Moody’s also announced that they have assigned a senior unsecured rating of Baa2 to the euro-denominated bond offering by the Government of the Philippines.
The rating mirrors the Government of the Philippines’s issuer rating of Baa2 with a stable outlook.
Moody’s Baa2 issuer rating on the Philippines has largely been attributed to the country’s steady strong economic performance, strengthening fiscal position and limited vulnerability to external shocks. Moody’s however, issued warnings that the global coronavirus pandemic has disrupted and could potentially reverse these trends.
The stable outlook, meanwhile, reflects Moody’s assessment that the recovery from Covid-19 shock will restore economic growth relative to peers. This is balanced against the risk that the Philippine economy’s potential is hit more significantly than Moody’s current estimates and that if fiscal and economic reform momentum does not resume, it will leave the Philippines’s economic and fiscal strength somewhat weaker.
According to the terms and conditions available to Moody’s, the bonds to be issued will constitute direct, unconditional and unsubordinated obligations of the Government of the Philippines (the issuer).
The proceeds from the bonds are intended for general purposes, including budgetary support.
Earlier this week, the Philippine government said it has appointed BNP Paribas, Credit Suisse, Goldman Sachs, J.P. Morgan, Nomura, and Standard Chartered Bank as Joint Lead Managers and Joint Bookrunners to arrange a series of fixed income investor meetings in Asia, Europe and the United States commencing on April 19th 2021.
The proposed euro-bond issuance is expected to be about $500 million. This possible return to the euro bond market may come more than a year after it successfully issued zero-coupon euro-denominated bonds in February 2020 wherein it raised €1.2 billion.
Should the euro bond offering push through, this would be the country’s second offshore bond sale this year after it sold ¥55 billion ($500 million or about P24.2 billion) in three-year zero-coupon Samurai bonds last month. The country aims to borrow a total of P3.03 trillion this year, roughly the same amount it borrowed in 2020.
With Bernadette Nicolas
Image courtesy of Nonie Reyes
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