The Department of Finance (DOF) said the national government is looking at selling euro-denominated retail bonds targeted at overseas Filipinos.
Finance Secretary Benjamin E. Diokno said the Bureau of the Treasury is studying the possible domestic issuance of retail treasury bonds (RTB) in euro denomination. As early as now, Diokno has said that they have received “strong demand” for retail euro bond.
“There’s a lot of capital in the domestic market. For example, there are new initiatives by the Treasury to float dollar denominated retail bonds, and we are receiving a demand for euro denominated retail treasury bonds,” Diokno said during the Makati Business Club forum.
Sought for comment, National Treasurer Rosalia V. de Leon confirmed that they are considering the possible euro bond sale in the local market.
According to De Leon, the idea of euro denominated RTB came after Diokno’s recent visit to Frankfurt, Germany.
To recall, the economic managers, led by Diokno, hosted a financial literacy session in Frankfurt, Germany in January where they announced the launch of the country’s second retail dollar bond (RDB) offering.
“When we announced the RDB in Frankfurt, some of our Kababayan asked us why not issue euro bonds because they said that their savings are in euro. So, Secretary Diokno asked us to study it,” De Leon said.
Earlier, Diokno said the government will issue retail dollar bond within the first quarter of the year and is expected to raise $3 billion.
RDBs are government securities that earn fixed interest over the term of the bond and it is offered retail and to individual investors.
These securities are low-risk investment instruments and have higher yields than US dollar term deposit instruments. In 2021, the first RDB has a minimum placement of $300.
The planned retail bond issuance comes a day after the DOF announced that the government recorded a debt-to-gross domestic product (GDP) ratio of 60.9 percent for end-2022.
The latest debt ratio was lower than the 61.8 percent target that was set in the Medium-Term Fiscal Framework (MTFF).
“Our medium-term fiscal plan and exemplary GDP growth have allowed us to outpace our borrowings. This gives us confidence that we can reach our targets by 2025,” Diokno said.
Through the MTFF, the government aims to bring down the debt-to-GDP ratio to less than 60 percent by 2025 and further down to 51.1 percent by 2028; reduce the deficit-to-GDP ratio to 3.0 percent by 2028; and maintain high infrastructure spending at 5 to 6 percent of GDP annually.
For December 2022, the total outstanding debt also took a favorable decrease by 1.7 percent or P225.3 billion due to local currency appreciation and net redemption of domestic government securities.
Out of the P13.4 trillion total outstanding debt as of end-2022, domestic debt accounted for P9.2 trillion or 68.6 percent of the total, while external debt made up the remaining P4.2 trillion or 31.4 percent of the total.