The Duterte administration will sell new debt securities to foreign investors, including the government’s first green bond issue, a document from the Office of the Treasurer has revealed.
Based on a Treasury document obtained by reporters on Monday, March 21, the government plans to raise funds through an issue of benchmark-sized US dollar-denominated bonds with terms of five, 10 ,5 and 25 years old.
The document showed that the initial price guidance for the five-year note is set at 125 basis points on the Treasury zone, while the 10.5-year paper is at 165 basis points on the zone. Treasury bills and the 25-year bond at the 4.7% zone.
The proceeds from the five-year and 10.5-year debt securities will be used for “general budget financing”, while the 25-year IOU is “to finance/refinance assets in accordance with the sustainable financing framework of the Republic”.
On February 18, Finance Secretary Carlos G. Dominguez III announced that the Philippines would soon launch its first green bonds in the offshore debt markets.
Dominguez said the green issue in the amount of at least $500 million aims to help raise funds for the country’s clean energy projects and other sustainable initiatives.
Dominguez had said the sale of the debt securities, known as sovereign environmental, social and governance bonds, would take place “in the coming weeks.”
Bank of China, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Mizuho Securities, Morgan Stanley, Standard Chartered and UBS are the lead managers and bookrunners for the three-tranche issuance.
The first issue of these green bonds by the Philippines is part of a series of initiatives aimed at implementing concrete actions in the fight against climate change, in the face of the “disappointing” response from Western countries.
“We can’t wait for bureaucrats in the industrialized world to take their time splitting hairs over the idea that the countries that have polluted and continue to pollute the most should bear most of the financial burden of reversing of global warming,” Dominguez said.
Meanwhile, domestic investors continued to press for an increase in Philippine benchmark interest rates for short-term loans in the run-up to a rate hike by the US Federal Reserve to moderate inflation.
At Monday’s treasury bill auction, the flagship 91-day treasury bill rate, which banks use to price their loans, rose to 1.536% from 1.305% previously.
Rates on six-month IOUs increased to 1.607% from the previous 1.458%.
The one-year debt yield also rose slightly to 1.792% from 1.732%.
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