Gov't to tap overseas debt markets anew
The Marcos administration will again tap the overseas debt markets with its three-tranche US dollar dominated bond sale that aims to bridge the government’s budget deficit for the year.
Based on a document obtained by reporters, the Philippine government launched on Monday, Jan. 9, the benchmark-sized bond offer with tenors of 5.5-years, 10.5-years and 25-years. According to the document, the 25-year tranche comprised sustainability or green bonds.
Initial price guidance for the 5.5-year note is set at plus 155 basis points over Treasuries area, while the 10.5-year paper is at plus 195 basis points over Treasuries area and the 25-year bond at the 5.95 percent area.
This issuance is President Marcos’ second foreign commercial borrowing. In October last year, the government sold $2 billion in new borrowings.
Of that amount, the government sold $500 million worth of five-year bonds, $750 million of 10.5-year IOUs, and $750 million of 25-year green or sustainability bonds.
The five-year bonds was priced at 5.17 percent, while the 10.5-year notes carried a yield of 5.609 percent, and the 25-year green bonds was priced at 6.1 percent.
In 2023, the Marcos administration plans to borrow P2.207 trillion from domestic and foreign creditors. This is slightly lower compared with P2.212 trillion revised program for last year.
Most of the government’s financing for 2023 would come from local sources, accounting for 75 percent of the total.
The government is looking at P1.653 trillion worth of domestic borrowings, while the remaining P553.5 billion would come from the foreign lenders.
As of November 2022, the outstanding debt of the national government stood at P13.644 trillion, up by a marginal 0.02 percent from P13.641 trillion in October.
But year-on-year, total debt jumped 14 percent from P11.931 trillion in November 2021.
Domestic debt amounted to P9.43 trillion, P72.73 billion or 0.78 percent higher compared to the end-October 2022 level.
Meanwhile, external debt amounted to P4.22 trillion, P69.58 billion or 1.62 percent lower than the end-October 2022 level due to the P106.98 billion impact of local currency appreciation and P13.38 billion net repayment.
For 2023, the national government expects its budget deficit to drop to 6.1 percent of gross domestic product (GDP) from 6.9 percent ceiling last year.