Republic of the Philippines
| Philippines 2030 bond Spread over US Treasuries |
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The Philippines has become accustomed to being Asia's odd man out: sidelined from a rampant economic recovery and saddled with economic challenges and a fiscal straitjacket that are a distant memory for its regional neighbours. Indeed, borrowing in the debt capital markets has been straightforward for other Asian sovereigns over the past 12 months, with vast liquidity driving a strong appetite for Asian risk. But while other Asian sovereign issuers tapped the markets very successfully during the period, most notably perhaps, China, with a €1 billion deal in October 2004, the Philippines just muddled through. In 2004, while investors fretted about the prospects of a downgrade for the Philippines in light of the worsening economic outlook, the government raided the market as best it could, tapping existing issues and raising small amounts of debt whenever possible, to the irritation of the market. "All they did was to tap existing deals and ended up bidding down their curve," says one banker.
So it seems perversely apt that the ignominy of Asia's only sovereign downgrade since the financial crisis helped provide something of a turning point in the country's fortunes when it did in fact arrive in January 2005.