Philippines raises $4.2bn from retail bonds

MANILA: The Philippines raised a record 180 billion Philippine pesos ($4.2 billion) from a retail treasury bonds issue, far more than expected, reflecting investors' hunger for higher yields and ample liquidity in financial markets.

The government sold 44.15 billion pesos of 2027 retail bonds and 135.66 billion pesos of 2032 bonds, Deputy Treasurer Eduardo Mendiola said at the close of the sale on Friday.

The government did not immediately give details on order levels, but demand was strong enough that it had to cut short the nine-day offering period which was supposed to end on Feb 29.

Mendiola said on Thursday that the government was likely to raise around 150 billion pesos.

Manila had raised 110 billion pesos at its last retail bond sale in October, which was a record at the time.

The new 15-year bond pays a coupon of 5.375 percent and the 20-year paper 5.875 percent, with quarterly interest payments.  The issue data of the bonds is March 1.

The Southeast Asian country relies heavily on local and foreign borrowing to fund its budget deficit, which is expected to hit 2.6 percent of GDP this year, or 279 billion pesos year, from an estimated 2.0 percent in 2011.

Mendiola said on Thursday the retail bond offer was meant to provide small investors with safe investment options and should not alter the government's local borrowing plan for the year.

Placements in the central bank's short-term Special Deposit Account (SDA) window, an indicator of money market liquidity, were a hefty 1.71 trillion pesos in the week ending Feb. 3, slightly down from the previous week's record 1.72 trillion pesos.

First Metro Investment Corp, BDO Capital, BPI Capital, and Deutsche Bank were issue managers of the bonds.

Landbank of the Philippines, Development Bank of the Philippines, Philippine National Bank, China Banking Corp were joint coordinators.

Copyright Reuters, 2012