The Philippines will be able to sell more than $500 million of peso debt to global investors at a discount of at least 10 percent to local yields because of tax benefits, Union Investment and Erste Sparinvest KAG said.

The government’s benchmark 10-year peso bond yielded 6.4 percent Wednesday, and money managers at the two global funds said a minimum rate of 5.8 percent on the new debt would be acceptable as the interest income on the securities isn’t taxable. The Philippines’ first global peso bond sale is “set to go” and the government will “be opportunistic” in its borrowing, Finance Secretary Cesar Purisima said Wednesday.

The Philippines government hired six banks, led by Citigroup Inc. and Deutsche Bank AG, to arrange the sale of at least $500 million worth of 10-year peso-denominated notes, said a person with knowledge of the plan, who asked not to be identified. Credit Suisse Group AG, Goldman Sachs Group Inc., HSBC Holdings Plc and JPMorgan Chase & Co. were named as joint book runners, the person said.

The Philippine peso will climb 3.4 percent to 43 per dollar by the end of next year, according to the median forecast in a Bloomberg survey of 11 analysts. The currency has climbed 9.4 percent in the past year.

“This one will be massively subscribed,” said Edwin Gutierrez, who manages about $5 billion of emerging-market debt at Aberdeen Asset Management Plc in London. “Guys are looking for Asia local plays that have a modicum of yield and yes, we will play it.”

Developing-nation issuers sold $1.8 billion of local- currency debt in global markets so far this year, the most since the same period in 2007, data compiled by Bloomberg show. The peso bonds will be popular as yields on dollar debt have slumped and Asian currencies are rising, said Sergey Dergachev, who helps manage about $6 billion of emerging-market debt in Frankfurt at Union Investment, Germany’s third-largest money manager.

“The offering will be very successful even at a 10 to 15 percent discount to onshore yields because the tax advantage is a big issue,” he said. “I would buy at 5.8 percent to 6 percent yields.”

The spread on Philippine 6.5 percent dollar bonds maturing in January 2020 above similar-maturity Treasuries shrank to 139 basis points, or 1.39 percentage points, down from more than 250 basis points a year ago. The yield reached 3.78 percent on Aug. 23, the lowest since they were first sold in July 2009. The average spread for emerging-market debt on JPMorgan’s EMBI+ index has fallen to 276 basis points, from as high as 865 on Oct. 24, 2008.