Philippines starts exchange offer for holders of 14 series of bonds

By Jennifer Chiou

New York, Sept. 20 - The Republic of the Philippines announced an invitation to the holders of several series of its bonds to participate in an exchange offer for new dollar-denominated global bonds due 2021 or reopened 6.375% global bonds due 2034.

According to a 424B3 filing with the Securities and Exchange Commission, affected bonds in group A eligible for either the new series of bonds or reopened bonds include the:

• $1,484,215,000 of 8.375% bonds due Feb. 15, 2011 with a fixed spread of 5 basis points;

• $948,383,000 of 9% bonds due Feb. 15, 2013 with a fixed spread of 25 bps;

• $1,601,622,000 of 8.25% bonds due Jan. 15, 2014 with a fixed spread of 70 bps;

• $976,414,000 of 8.875% bonds due March 17, 2015 with a fixed spread of 70 bps;

• $1.3 billion of 8% bonds due Jan. 15, 2016 with a fixed spread of 70 bps;

• $629,703,000 of 8.75% bonds due Oct. 7, 2016 with a fixed spread of 73 bps; and

• $822,381,000 of 9.375% bonds due Jan. 18, 2017 with a fixed spread of 90 bps.

The reference yield for the above bonds will be the four-month Libor for the 8.375% bonds and the dollar swap rate for all other series.

Bonds in group B eligible for the reopened bonds include the:

• $962,468,000 of 9.875% bonds due Jan. 15, 2019 with a relative spread of negative 165 bps;

• $1.5 billion of 8.375% bonds due June 17, 2019 with a relative spread of negative 155 bps;

• $774,204,000 of 7.5% bonds due Sept. 25, 2024 with a relative spread of negative 93 bps;

• $480,406,000 of 9.5% bonds due Oct. 21, 2024 with a relative spread of negative 73 bps;

• $1,854,744,000 of 10.625% bonds due March 16, 2025 with a relative spread of negative 58 bps;

• $2 billion of 9.5% bonds due Feb. 2, 2030 with a relative spread of negative 18 bps; and

• $2,384,506,000 of 7.75% bonds due Jan. 14, 2031 with a relative spread of negative 16 bps.

The reference yield for the group B bonds will be the reopening yield of the reopened bonds.

The Philippines said that it will issue a maximum of $3 billion of new global bonds in the offers, adding that, if any, the minimum tally of new bonds due 2021 will stand at $500 million.

Those exchanging bonds due 2030 and 2031 will receive a special cash payment of $207 and $167 per $1,000 principal amount, respectively, in addition to new bonds.

The offers will end at 5 p.m. ET on Sept. 28.

New, reopened bonds

The new dollar global bonds will mature on Jan. 15, 2021. Interest will be payable in January and July of each year.

The securities will not be callable.

Previously, the republic issued $1 billion of the 6.375% global bonds due 2034 on Oct. 23, 2009 in addition to $850 million of the bonds on Jan. 13, 2010.

The reopened securities have a final maturity date of Oct. 23, 2034.

New reopened bonds issued in the exchange will form a single series with those previously issued.

The offering of the new global bonds is conditioned on the approval from the Monetary Board of Bangko Sentral ng Pilipinas, the central bank of the Republic.

Citi, HSBC and UBS Investment Bank are the joint dealer managers for the global bonds.

The information agent is Bondholder Communications Group, LLC (attn: Ruth Perez at rperez@bondcom.com; 212 809-2663 or 44 20 7382 4580).

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