Gov’t borrowings rose 23% to P27.7B in September

THE NATIONAL government borrowed P27.7 billion in September, up 23 percent year-on-year, mainly on increased local borrowing as a result of the debt swap conducted that month.

The total borrowings last September surpassed the P22.5 billion recorded in the same month last year.

Gross external borrowings sourced from multilateral lenders’ program and project loans amounted to P914 million in September, down from P5.3 billion a year ago.

Gross domestic borrowings resulting from the domestic bonds exchange that month reached P26.8 billion, up from P17.2 billion last year.

Last September, the government swapped P237 billion in illiquid state debt paper with new benchmark bonds due 2025 and 2040. The Bureau of the Treasury also accepted new subscription offers worth P9.6 billion for 2025 bonds. As a result, the government established new benchmark bonds worth P121 billion (2025 bonds) and more than P142 billion (2040 bonds).

The government launched a domestic debt swap in August to inject more liquidity into the market amid external volatility.

At the end of the first nine months, government borrowings totaled P279.9 billion, slightly down from P280.1 billion a year ago.

End-September foreign borrowings increased to P105 billion from P94.3 billion last year. The amount borrowed domestically as of end-September decreased to P174.9 billion from P185.8 billion a year ago.

The borrowing program for this year is 75-percent domestic and 25-percent foreign as “ample domestic liquidity will allow the government to source majority of its financing needs from domestic market,” the Cabinet-level, interagency Development Budget Coordination Committee said in its midyear report.

In January, the government borrowed offshore through the sale of $2 billion worth of 25-year bonds at a record-low coupon of 3.95 percent. Of the proceeds of the global bond issuance, the bigger chunk of $1.5 billion was used to swap and retire old debt paper previously issued at higher rates and maturing between next year and 2034, while $500 million will be infused into the budget.

During the fourth quarter, the government had planned to borrow P135 billion domestically through the issuance of treasury bills and bonds.

The government is also considering to sell bonds offshore before yearend as pre-funding for next year’s expenditures. The Treasury plans to issue $750 million in sovereign bonds for 2016.

Next year, the government plans to borrow P674.8 billion, lower than this year’s program of P710.8 billion, to slash the debt stock, or the share of outstanding debt to the gross domestic product, to a record-low of 41.8 percent.

In 2016, domestic borrowing will make up 85 percent of the total or P570.2 billion. The government will also borrow P104.6 billion from foreign sources next year—P54.1 billion in program loans, P17.1 billion project loans, and P33.4 billion in bonds and other inflows.

Last year, the national government borrowed a total of P369 billion—the lowest amount since 2002’s P275 billion. Ben O. de Vera

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