January 05, 2006 |
|Investor demand for emerging markets bonds showed no sign of waning in the new year as the Philippines on Wednesday attracted more than $14bn of orders for a new two-tranche issue.|
The country sold $2.1bn of bonds denominated in both dollars and euros.
The sale was the 10th biggest by an emerging markets sovereign with a sub-investment grade credit rating to date, according to data from Dealogic.
The strong demand follows a sharp increase in inflows of emerging markets bond funds last year.
Investors contributed a record $10.1bn to these funds, more than treble the $3.2bn of inflows in 2004, according to Emerging Portfolio Fund Research, which tracks fund flows globally.
Investors placed orders worth more than $10bn for the $1.5bn of 2031 bonds, which allowed the borrower to reduce the yield to 7.875 per cent from about 8 per cent, according to one source close to the deal.
One year ago, Manila sold 25-year bonds to yield about 9.5 per cent.
The country also sold ?500m of 10-year bonds to yield 6.375 per cent, lower than the initial 6.5 per cent guidance, after the order book exceeded ?3bn.
The Philippines is rated B1 by Moody’s Investors Service, BB- by Standard & Poor’s and BB by Fitch Ratings, between two and four notches below investment grade.
Citigroup, Credit Suisse First Boston, Deutsche Bank and UBS were lead-managing the sale.
Separately, Turkey has announced plans to issue dollar-denominated bonds with a maturity of 30 years. The size and timing of the issue, to be lead-managed by Citigroup and Deutsche Bank, are undecided.