Monetary authorities have approved in principle the plan to sell bonds offshore next year even as the Bureau of the Treasury still has to decide on the right timing to execute the transaction given heightened uncertainty in global markets.
The program to sell at least $500 million in sovereign bonds in 2017 was approved in principle last Thursday by the Monetary Board, the Bangko Sentral ng Pilipinas’ policymaking body, an official privy to the matter said.
“It’s been approved in principle because details will not be coming until they [the Treasury] start talking to the markets,” the official said, citing for instance that “we’ll never know what the rates will be next year.”
According to the official, the Treasury “might decide to borrow less or borrow more” depending on what they will find out later on.
“These are highly uncertain times, especially after the election of [incoming US President Donald] Trump,” the official said.
A foray into the global bond market entails approval of the BSP’s Monetary Board as well as the President.
Last month, National Treasurer Roberto B. Tan said that while it has always been the country’s tradition to tap the offshore bond market at the start of each year, “we will assess the market once a Fed decision (on a rate increase) is made (this month) and how the market will take it and how conditions will be after the Fed decision.”
Markets are betting on a US Federal Reserve rate adjustment this month after its chair, Janet Yellen, last month said it would be done “relatively soon.”
“We will continue to monitor the market and assess whether it’s the right time—in the past, almost always we hold it either in the first or second month; it’s only this year that we held it in the second month,” Tan said. The government slightly delayed to February this year’s offshore bond sale amid global market volatility late last year.
Tan had also said that they preferred to sell long-term, at least 10-year, bonds.