Gov’t eyes issuance of $1-B global bonds in 2018

The Philippines plans to issue $1 billion in offshore bonds next year, a smaller volume than the previous offerings, as the government relies more on loans and grants from its development partners such as China and Japan.

Bureau of the Treasury documents showed that of the P888.1 billion in gross borrowings programmed by the government for 2018, 80.2 percent or P711.8 billion would be sourced locally or from the sale of treasury bills and bonds.

The remaining 19.8 percent or P176.3 billion, equivalent to $3.46 billion, will be borrowed from external sources.

The global bonds to be sold next year will be about half of the $2 billion worth of debt paper issued yearly from 2015 to 2017, Treasury data showed.

In January, the Philippine government sold $500 million in new global bonds while also successfully switching $1.5 billion in previously issued bonds.

The 25-year bonds maturing in 2042 were sold at a coupon of 3.7 percent, similar to the record-low rate last year and below the 3.95-percent initial pricing guidance.

This year’s global bond sale attracted $4.5 billion in tenders.

The new money raised from the offshore bond issuance were used for budgetary support, specifically the higher infrastructure spending requirement of the Duterte administration.

Meanwhile, bulk of the foreign financing for next year will come from program loans from multilateral lenders worth $1.65 billion.

Project loans will reach $805 million in 2018.

Last week, Finance Undersecretary Karen Singson said they expected $1.8 billion in financing from China and Japan to come in starting this year until 2018, part of the two countries’ commitments worth a total of $9 billion over the next five years.

Singson had said that the Chinese and Japanese loans would finance the P2.7-billion Chico River Pump Irrigation Project, the P10.9-billion New Centennial Water Source-Kaliwa Dam Project and the P355.6-billion Metro Manila Subway Project Phase 1.

Also, there was “a lot of progress” in the bilateral negotiations for financing from South Korea, Singson had noted.

The South Korean loans, which have “very attractive” terms, will be for the $97-million Panguil Bay Bridge that will connect Lanao del Norte and Misamis Occidental in Mindanao, as well as the $183-million Cebu International Container Port, according to Singson. —BEN O. DE VERA