The Republic of the Philippines ( RoP ) broadened its commitment towards sustainability finance as it priced on January 23 its inaugural euro-denominated offering.

The sovereign actually priced a dual-currency bond, raising US$2.25 billion in US dollar-denominated bonds due in 10 years and 25 years, together with a €1 billion ( US$1.04 billion ) bond with a tenor of seven years.

Both the 25- and seven-year tranches are sustainability debt issued under the RoP’s sustainable finance framework. The euro tranche also marked its first return to the euro bond market since April 2021.

The 10-year bond was priced at a spread of 90 basis points ( bp ) over the US treasuries, or 30bp tighter than the initial price guidance in the 120bp area, while the 25-year sustainability bond was printed at 5.90%, or 20bp inside the initial marketing range of 6.10%.

The euro sustainability bond was priced at 125bp over mid-swap, representing a 35bp tightening from the initial price guidance in the 160bp area. All three tranches were priced with minimal to no new issue premium.

The transaction illustrates the RoP’s ability to capture a conducive issuance window amid a challenging market environment. The offering attracted robust demand, and the strong order book momentum carried across the US dollar and euro markets, with interest from a diverse pool of high-quality global accounts, showcasing investors’ confidence in the sovereign’s credit profile and long-term outlook.

The US dollar tranche garnered a total demand of US$6.2 billion, with the 10-year bond generating US$3.2 billion from 156 accounts, while the 25-year bond attracted orders worth US$3 billion from 144 accounts.

The proceeds from the 10-year US dollar bond will be used for general budget financing, while those from both the US dollar and euro sustainability bonds will be used for general budget financing and to finance or refinance assets in line with the RoP’s sustainable finance framework.

HSBC, Standard Chartered and UBS acted as the joint sustainability structuring banks as well as joint bookrunners and lead managers for the transaction, along with Citi, Goldman Sachs, J.P. Morgan and Morgan Stanley.

“With a constructive market developing over the week, we saw an opportune window to re-enter the capital markets,” says Sharon Almanza, the Philippines’ national treasurer. “Our goal was to capitalize on the current market momentum to secure the most efficient cost dynamics ahead of potential uncertainties in the near future.”

Finance secretary Ralph Recto adds: “The success of this offering underscores our ability to seize favourable market conditions efficiently. This is a reflection of the trust and confidence of investors in the leadership and policies of the Marcos Jr administration, [and is] further reinforced by the country’s improving credit rating trajectory.”