The government’s debt stock is expected to rise faster than any other major Southeast Asian market this year as reconstruction efforts fuel extraordinary inflows of low-interest foreign loans from other countries and multilateral institutions.
In a report, Standard & Poor’s said Asia-Pacific governments would continue to brave international debt markets this year despite volatile conditions.
“We project that rated Asia-Pacific sovereigns’ commercial debt stock will reach an equivalent of $15.4 trillion by the end of 2014, up by $1 trillion, or 6.9 percent, from 2013,” S&P said yesterday.
According to S&P, gross commercial borrowings by the Philippines would rise 8.57 percent, faster than the average for the rest of the region. The pace of commercial borrowing by the government is also projected to be faster than all major Southeast Asian markets.
Growth in commercial debt for Malaysia will rise by 7.67 percent, Indonesia by 7.2 percent, Singapore by 2.28 percent, Thailand by 2.81 percent, and Vietnam by 6.79 percent.
The Philippines is expected to end the year with a total commercial debt stock, both short and long term, of $124.1 billion from $114.3 billion.
Meanwhile, S&P said sovereign issuances in the region would remain attractive, noting that countries rated below investment grade would account for just a small fraction of issuances.
S&P said it expected that Japan—Asia-Pacific’s largest advanced economy—would continue to dominate the issuance of long-term government commercial debt in the region in 2014, with $1.8 trillion in gross issuances, followed by China.
S&P said that as both countries, which are rated ‘AA-’, would account for 84 percent of gross long-term government borrowing by rated Asia-Pacific sovereigns in 2014.
“In contrast, sovereigns with speculative-grade ratings will account for just about 2 percent of gross long-term commercial borrowing by rated [Asia-Pacific] sovereigns this year,” S&P said.