PH plans to issue yen-denominated bonds in 2018

The government plans to issue samurai bonds in Japan next year while the sale of dollar-denominated and panda bonds will push through as scheduled, Finance Secretary Carlos G. Dominguez III said.

During a meeting with National Treasurer Rosalia V. de Leon last week, Dominguez discussed the possibility of issuing samurai bonds, referring to yen-denominated debt paper issued in Tokyo by non-Japanese firms.

“I told her she should make a position on that. The direction I am thinking, but we have to confirm it, is we’ll probably do a samurai bond [issuance] sometime next year,” Dominguez said.
Alongside the upcoming panda bonds issuance in China and the yearly global bond sale, samurai bonds will “diversify our sources” of external financing, he said.
“We haven’t done a samurai bond issuance in a long time, but we have to get indication, authority and market appetite. Will it be tapered? We’ll have to get indication on interest rates, what the exchange risks are going to be. So she’s (de Leon) making that study,” he added.
As for the panda bond sale planned for next month and the global bond issuance usually done at the start of the year, Dominguez said the exact dates to undertake them would depend on market conditions. “But, as I’ve said, we prefer to them sooner than later.”

Dominguez said the department was taking into consideration the normalizing global economy, improving US economy, as well as US President Donald Trump’s upcoming appointments at the US Federal Reserve.

“Who is he [Trump] going to appoint there, what is their philosophy, we don’t know that, so it’s up in the air. So it is better to be early than late,” Dominguez explained.

The Finance chief had said they were planning to issue by November $200 million in three- to five-year panda bonds, which were yuan-denominated debt paper issued in China by foreign governments or companies.

Also, the Philippines is planning to issue $1 billion worth of bonds offshore next year. The volume is smaller than the previous offerings as the government relies more on loans and grants from its development partners such as China and Japan for funding.

The global bonds to be sold next year will be about half of the about $2 billion worth issued yearly from 2015 to 2017.

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 711.8 billion will be sourced locally or from the sale of treasury bills and bonds.

The remaining 19.8 percent or P176.3 billion, equivalent to $3.456 billion, will be borrowed from external sources.

In general, “our plan of borrowing 80 percent from the domestic market and 20 percent in foreign currencies remains unchanged. We will, therefore, remain active in the foreign markets,” Dominguez said.—BEN O. DE VERA