The Duterte administration has completed its third foreign commercial borrowing this year.
The national governm
ent has raised $3 billion, equivalent to P146 billion, from a dual tranche offering of 10.5-year and 25-year global bonds, the Bureau of the Treasury reported on Tuesday, June 29.
“Proceeds of the issuance will be for the Republic’s general purposes, including budgetary support,” the Treasury said in a statement.
The Philippines’ return to the international debt markets follows the $2.5 billion sale of a triple-tranche euro-denominated bonds in April, and the $500 million three-year Japanese yen-denominated “Samurai” bonds in March.
President Duterte plans to borrow as much as $7 billion from commercial debt markets in 2021 to bridge the government’s budget deficit. The country has so far raised $6 billion from three offshore bond issuances.
The new 10.5-year papers were priced at a coupon rate of 1.95 percent, while the 25-year notes secured an interest rate at 3.25 percent.
The Philippines tapped Bank of China, Deutsche Bank, Goldman Sachs, Morgan Stanley, Mitsubishi UFJ Financial Group, Standard Chartered and UBS as joint bookrunners.
The Treasury bureau said the government was able to take advantage of “improving dynamics in both treasury and credit markets” despite “relatively volatile markets.”
Finance Secretary Carlos G. Dominguez III described the government’s latest bond issuance as a “success,” saying it “highlights the continuing confidence of the international investor community in the Philippines.”
“It shows that investors appreciate the Duterte administration’s heightened efforts to revive the economy back to pre-pandemic levels while maintaining fiscal responsibility,” Dominguez said.
Meanwhile, Finance Undersecretary Mark Dennis Joven said the government’s success in international debt markets underscored the attractiveness of the Philippines’ credit profile to the investor community.
Joven added the financial market’s confidence in the country’s economic fundamentals remains despite the prolonged pandemic.
For her part, National Treasurer Rosalia de Leon said there was a heavy bias towards the 25-year offering, underscoring the “enduring attractiveness of Philippine credit even against the many waves of tribulations stemming from this pandemic.”
“Investors see our economic revival is imminent, strong, and long lasting,” de Leon said.
Earlier, Dominguez said the national government will borrow P3 trillion this year. Of that amount, 75 percent of it will be sourced from the domestic market.
At end-April 2021, the national government’s debt burden zoomed 28 percent to P10.991 trillion from P8.6 trillion in the same period last year.
Of the total debt stock, 71.1 percent were domestically borrowed, while 28.9 percent were sourced from external creditors.