The Philippines' total outstanding external debt increased by 17.5 percent to $139.643 billion at the end of September 2024, compared to $118.833 billion in the same period last year, due to increased borrowings by both the government and private sector, as well as non-residents' investments in onshore debt securities.
According to the Bangko Sentral ng Pilipinas (BSP), the $20.81 billion year-on-year increase was “primarily driven by total net availments by both public and private sector borrowers, as well as the net acquisition of Philippine debt securities by non-residents.”
Despite the increase in the debt stock, the BSP considers the external debt ratio relative to the gross domestic product to be prudent at 30.6 percent. This compares to 28.9 percent at the end of June this year and 28.7 percent at the end of 2023.
Over the 12 months ending in September, the public sector borrowed $7.94 billion, while the private sector took out $6.63 billion in new foreign loans. Non-residents acquired $5.03 billion worth of Philippine debt securities, which the BSP cited as evidence of “sustained investor confidence in Philippine credit.”
The debt stock also increased due to a positive foreign exchange (FX) revaluation of borrowings in other currencies, amounting to $860.86 million, and prior-year adjustments of $347.63 million.
On a quarterly basis, the external debt increased by 7.3 percent, or $9.46 billion, from $130.18 billion at the end of June 2024.
Between July and September, the government raised $4.17 billion, including $2.5 billion from the Triple Tranche Fixed Rate Global Bonds issuance. The government also borrowed $1.44 billion from official creditors to finance development programs and projects.
Private sector corporations borrowed $1.82 billion from the offshore market to “expand their funding base and augment their working capital,” according to the BSP.
The debt stock increased by an additional $2.77 billion due to non-residents' net acquisition of domestic debt securities. The BSP attributed this to investors seeking yields in emerging market debt securities, anticipating a US Federal Reserve rate cut in September and a weakening of the US dollar in the third quarter.
The BSP recorded $1.56 billion as positive FX revaluation of borrowings in other currencies during the quarter, primarily due to the weaker US dollar against the Japanese yen. This increase was slightly offset by negative prior period adjustments of $248.77 million.
As of the end of September, the maturity profile of the Philippines' external debt remained predominantly medium and long-term (MLT), representing 79.4 percent of the total, or $110.87 billion. Outstanding short-term debt accounted for 20.6 percent, or $28.77 billion.
Of the MLT accounts, 55.7 percent ($65.98 billion) have fixed interest rates, 43.2 percent ($51.20 billion) have variable rates, and 1.1 percent ($1.35 billion) are non-interest bearing.
The BSP identified Japan ($15.38 billion), the Netherlands ($4.61 billion), and the United Kingdom ($4.51 billion) as the country’s major creditor countries.
Public sector external debt reached $86.88 billion, or 62.2 percent of the total outstanding external debt. Government loans comprised 92.2 percent ($80.13 billion) of public sector obligations, with the remaining 7.8 percent ($6.76 billion) attributed to borrowings by government-owned and controlled corporations, government financial institutions, and the BSP.
Private sector debt increased to $52.76 billion, driven by a $2.52 billion increase in local banks’ liabilities from offshore borrowing. Increased corporate debt also stemmed from a $599.04 million net acquisition of debt securities by non-residents from residents and a $163.4 million positive FX revaluation.