PH raises $2.75 B from bond sale

Published December 3, 2020, 2:42 PM

by Chino S. Leyco

The Duterte administration has completed its third foreign commercial borrowing this year to bridge the gap between the government’s lower revenues and higher spending, the Department of Finance (DOF) said.

In a statement, Finance Secretary Carlos Dominguez III said the national government raised $2.75 billion, roughly P132.1 billion, through the sale of dual tranche 10.5-year and 25-year global bonds priced at 1.648 percent and 2.65 percent, respectively.

Finance Secretary Carlos G. Dominguez III

 “The success of our third offering this year in the international capital markets underpins the international investor community’s recognition of the Philippine economy’s strong fundamentals despite the global economic downturn caused by the COVID-19 pandemic,” Dominguez said.

“We believe this result indicated that international investors are aware of, and appreciate, the Duterte administration’s resolve to rebuild the domestic economy and its initial headway in steering it back to its pre-COVID growth trajectory,” he added.

For her part, National Treasurer Rosalia de Leon said the fresh issuance is another testament of the resilience and resolve shown by the Philippines to ascend from the tribulations brought about by the pandemic. 

It also manifested the government’s ability to identify and capture favorable market windows in such uncertain time, De Leon added.

National Treasurer Rosalia De Leon

 “Large portion of this success can be attributed to reforms intended to provide the catalysts to accelerate recovery and put the economy back on a strong growth momentum,” she said.

The national government would use the proceeds from the bond sale to support its budget, the treasury said.

Meanwhile, Finance Undersecretary Mark Dennis Joven said that despite the ramifications of COVID-19 on financial markets, the successful dual-tranche issuance speaks volumes about the confidence of the market in the Philippine economy, its sound credit profile, and growth trajectory.

The government tapped Credit Suisse, Daiwa Capital Markets, Deutsche Bank, Morgan Stanley, Standard Chartered Bank, and UBS as joint bookrunners for the transaction.

The latest commercial borrowing follows the $2.35 billion bond sale in April and 1.2-billion euro double-tranche global bond offering in January.

As of October this year, the national government’s gross borrowings already stood at P3.224 trillion, higher by 233 percent compared with P967.55 billion in the same period last year.

Breaking down, total domestic borrowings rose by 293 percent to P2.649 trillion from P673.8 billion, while foreign financing reached P574.43 billion, also higher by 95 percent compared with P293.75 billion last year.

Meanwhile, the national government’s outstanding debt stood at P9.368 trillion as of September 2020, higher by 18.5 percent than P7.907 trillion in the previous year.