Connected again
PLDT made a dazzling return to the offshore bond markets in June, breaking new ground for a Philippines issuer in terms of both tenor and funding costs.
The US$600m dual-tranche Reg S deal comprised a long 10-year bond and a 30-year tranche, the longest US dollar bond ever sold from the Philippines.
PLDT, formerly Philippine Long Distance Telephone Company, was able to print at an even longer tenor than the Philippine sovereign, which is restricted to issuing at a maximum tenor of 25 years.
The 10-year tranche set landmarks, too. It priced at the lowest coupon on record for a Philippine corporate issuer at that tenor and set a fresh benchmark for the region’s telecom sector as the lowest coupon for any Triple B rated peer.
The competitive pricing came despite the company’s almost two-decade long absence in the international bond market. PLDT made its last offshore visit in 2002 but was still able to follow a streamlined marketing process with one day of investor calls and bookbuilding the next day.
There had been a limited supply of US dollar bonds from telecom companies in South-East Asia in recent years, and PLDT’s trade, rated Baa2/BBB+/BBB, is the only rated dollar instrument from the Philippine corporate sector, adding to the rarity value.
Philippine banks maintain credit ratings, but the country’s corporate issuers have been able to issue US dollar bonds without a rating, often drawing on demand from wealthy Filipino private bank clients.
PLDT’s investment-grade ratings helped it garner strong and broad-based demand from institutional investors, with asset managers and fund managers taking around 80% of each tranche. Final orders came in at a total of US$10.2bn, the largest order book and oversubscription multiple achieved by any Philippine issuer.
Initial guidance started in the Treasuries plus 240bp and 260bp areas for the US$300m January 2031 portion and US$300m 30-year note, respectively. The price guidance was then revised to the 200bp and 220bp areas before the bonds priced at Treasuries plus 180bp and 195bp. The long 10-year and 30-year tranches printed with coupons of 2.5% and 3.45% to yield 2.566% and 3.495%, respectively.
The reoffer spread of both tranches came at a premium of only around 50bp to the Philippine sovereign. That was less than the 75bp spread for Indonesian state-owned enterprises over the sovereign at the time, although PLDT has no state ownership. The telecom company also flattened the 10s to 30s curve by 5bp–15bp for Triple B rated bonds from the global technology, media and telecom sector.
The deal’s success also encouraged a flurry of Philippine corporate issuers to follow PLDT to the dollar market.
Credit Suisse and UBS were joint global coordinators, lead managers and bookrunners.
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