By Beatriz Marie D. Cruz, Reporter
THE NATIONAL Government (NG) is unlikely to push through with its planned issuance of euro-denominated bonds this year, the National Treasurer said.
“When we issued the last $2.5-billion dollar bonds, it was more cost-efficient (than the euro bonds),” National Treasurer Sharon P. Almanza told reporters on the sidelines of an event late on Tuesday.
“On a swap basis, euro is costlier, so it’s really the dollar (that was issued). During that time, we just decided that maybe… (the euro bond is) still one of the possible (choices) but not for this year,” she said in mixed English and Filipino.
The NG last issued euro bonds in April 2021, raising €2.1-billion (P122.4 billion) to support its budget as the country was struggling amid the coronavirus pandemic.
The government planned to borrow $5 billion from the international debt market this year. It has already raised $2 billion from the issuance of US dollar-denominated global bonds in May, and another $2.5 billion in August. This leaves $500 million yet to be raised.
When asked how it will raise the remaining $500 million, Ms. Almanza said: “It will depend, because we’re also monitoring the deficit.”
“We’ve made adjustments, if you would look at the BESF (Budget of Expenditures and Sources of Financing), because we will be able to also source some loans from official development assistance,” she added.
The NG expects to receive P306.6 billion in program loans and P68.73 billion in project loans this year.
Ms. Almanza said the government is still eyeing Samurai bonds but is still monitoring the market.
“We are also watchful of the BoJ’s (Bank of Japan) move if they will hike (interest rates,) although the yen is now appreciating so it’s better,” Ms. Almanza said in mixed English and Filipino.
Markets widely expect the BoJ to keep interest rates steady at its meeting this week, but predict a hike by yearend, Reuters reported.
Finance Secretary Ralph G. Recto previously said the government is looking to raise about $500 million from Japanese yen-denominated bonds within the year. The Philippines last issued Samurai bonds in April 2022, raising ¥70.1 billion (P28.55 billion).
“Considering the factors influencing bond issuance costs, the government will want to assess market conditions, interest rates, investor demand, and economic indicators to determine the most optimal timing and structure for raising the remaining $500 million,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.
“With these factors in mind, the government can potentially minimize borrowing costs and achieve the financial objectives.”
Jonathan L. Ravelas, senior adviser at professional service firm Reyes Tacandong & Co., said it would be more cost-efficient to have another dollar bond issuance this year.
“Opportunity for dollar weakness creates an opportunity later to redenominate the dollar debt to peso later as more Fed cuts materialize,” he said in Viber chat.
The US Federal Reserve was expected to begin its easing cycle on Wednesday. Markets are pricing around 250 basis points of easing until the end of next year, Reuters reported.
RETAIL TREASURY BONDSMeanwhile, Ms. Almanza said the BTr has yet to decide if it will issue more retail Treasury bonds this year.
“So far, our auctions have been successful, and we have raised much from domestic, so it would depend on the deficit… We don’t have to really have to fill in the programmed borrowings for this year… so for better management of costs, debt service, we don’t have to borrow everything,” she said in mixed English and Filipino.
The government’s borrowing plan for this year is set at P2.57 trillion, with P1.92 trillion from domestic sources and P646.08 billion from foreign sources, according to BESF data.
The NG’s outstanding debt rose to a fresh high of P15.69 trillion as of end-July from P15.48 trillion as of end-June.
