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Manila Bulletin devider Business devider Marcos forays into foreign commercial borrowing

Marcos forays into foreign commercial borrowing

Published Oct 5, 2022 01:19 pm

The National Government (NG) has returned to the overseas debt markets for budgetary support, marking President Marcos' foray into foreign commercial borrowing, data from the Bureau of the Treasury showed.

Based on a Treasury document seen by reporters on Wednesday, Oct. 5, the Marcos administration launched a three-tranche, benchmark-sized US dollar denominated bonds with tenures of five years, 10.5 years and 25-years.

For the three tenors, the offering will be “US dollar benchmark”-sized, or at least $500 million in market parlance.

The document showed that initial price guidance for the five-year note is set at 155 basis points over Treasuries area, while the 10.5-year paper is at 220 basis points over Treasuries area and the 25-year bond at the 6.550 percent area.

Proceeds from the five-year and 10.5-year debt papers will be used for “general budget financing” while the 25-year IOU is “to finance/refinance assets in line with the Republic’s Sustainable Finance Framework.”

For the latest offering, BofA Securities, Goldman Sachs, HSBC (B&D), J.P. Morgan, Morgan Stanley, SMBC Nikko, Standard Chartered Bank, and UBS are the joint book runners.

Last March, the Duterte administration also tapped the offshore debt markets with the same tenors of five years, 10.5 years and 25-years. The government raised $2.25 billion from that triple-tranche bond sale.

For 2022, the Marcos administration plans to borrow P2.2 trillion to support the country’s economic recovery. Bulk of which will be drawn from domestic creditors.

According to Finance Secretary Benjamin E. Diokno, the government intends to raise its local financing to 75 percent from around 73 percent between 2016 and 2021.

As of August, the NG’s gross borrowings hit P1.379 trillion, down 42 percent from P2.387 trillion in the same period in 2021.

For the first eight months, the NG total borrowings from local creditors reached P1.041 trillion, down from P1.929 trillion a year ago.

External borrowings also decreased as of end-August by 26 percent from P458.51 billion to P337.79 billion.

Last Sept. 30, the Treasury bureau reported that the total NG debt stood at P13.021 trillion as of August, an increase of 12 percent or P1.379 trillion from P11.642 trillion a year ago.

Of that amount, 68.7 percent was domestic borrowings while 31.3 percent was sourced from foreign creditors.

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Bureau of the Treasury
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