The Philippines (PH) issued a $2.25bn ESG Samurai bond in March. But there have been various impressions behind the great achievements. Bankers on the deal pointed out that the deal has brought myriad achievements to the government, but bankers away from the deal disagreed. It was less impressive.
One of the bankers away from the deal identified that there was a lack of strong demand in the long-dated tranches. They assume that it could happen although the issuer paid extra premiums over its U.S. dollar secondary market curve. The banker added that the less impression could still happen although sentiment was not as severe as in the early year.
The ranges of guidance referred from the secondary levels of the issuer’s existing Samurai bonds. The pricing terms of Hungary’s February deal than the Philippines’ dollar curve are also the range. Investors took precaution very carefully. For instance, one big domestic investor analyzed that he found ESG deals interesting but not promising. The person decided not to participate due to the volatility of the domestic market.
The person argued that he does not have courage to buy during the situation. Given the hard time early this year, the person valued that it is true that the country’s market is getting better this March. So, investors tend to invest more in credits for a short-term investment horizon, in case the sentiment surges.
More investors would prefer the short-term investor horizon because it is challenging to hold six months or more amid the U.S. rate increase expectation. Plus the process of hiring banks for bookrunners is not straightforward. SMBC Nikko for instance was hired as a sole lead manager. So, the issuer must hire another bank.
