The Phillipines build huge book for dollar deal

After three months of relative scarcity, the Republic of Philippines closes a hugely succesful new tap with one of the largest order books ever seen in Asia.
The Republic of the Philippines brought its long awaited dollar-denominated debt deal to market late last night (July 25) when it priced a dual tranche $750 million offering via joint bookrunners Citibank, Deutsche Bank and JPMorgan.

The new deal is a tap of the RepublicÆs earlier dual tranche deal that consisted of a 10-year and a 25-year offering.

The 10-year tranche is a $300 million offering that prices off of the 8% coupon but is priced at 103.125 to yield at 7.532%, a spread of 2.46% over United States treasuries.

The tap of the 25-year tranche is a $450 million offering that prices off of a 7.75% coupon but is priced at 99.25 to yield at 7.819% or a spread of 263 over US treasuries.

The deal is a glowing success for Citi, Deutsche and JPMorgan, as it prices inside of initial guidance and closes with one of the largest books ever seen in Asia.

Initially the leads went out with guidance of 7.56% to 7.62% for the shorter tenured tranche and 7.86% to 7.91% for the 25-year tranche. However after building an Asian book of over four billion and picking up immense momentum once it was shopped in the US, the deal was able to close inside of guidance.

This is quite a benchmark considering that the Asian debt market have been frozen for the better part of three months.

The final book closed massively oversubscribed, the 10-year tranche closed at 5.7 billion on 228 accounts, an over subscription of 19 times, while the 25-year tranche closed at 6.5 billion with 248 accounts, an oversubscription ratio of 15-times.

Geographically, the shorter deal sold 36% into Asia, 30% into Europe, and 34% into the US. While the longer-dated deal sold 46% into Asia, 26% into Europe and 28% into the US. By investor type, banks bought 23% of the shorter-dated tranche, funds picked up 61%, insurers and pension funds bought 11%, while retail bought 4%. On the longer-dated tranche, banks bought 29%, funds bought 57%, insurers and pension funds bought 10% and retail 4%.

This is easily the largest book size ever accumulated for the Republic of Philippines, and offers almost no new issue premium - 4bp for the 2031s and 7bp for 2016. This is compared to the 12-20bp range that was previously paid by other Emerging Market deal from Uruguay, Columbia and Turkey.
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