Gov’t to borrow more from abroad in 2018

Economic managers have raised the share of foreign borrowings in next year’s financing program on the back of the government’s upcoming foray in the Chinese and Japanese debt markets.

The Cabinet-level Development Budget Coordination Committee (DBCC) last Friday raised to 26 percent the share of external borrowings in 2018 from 20 percent previously, while it kept the 80-20 ratio in favor of domestic sources from 2019 to 2022.

Finance Secretary Carlos G. Dominguez III told reporters that the share of foreign borrowings was increased due to the upcoming global bond sale early next year, as well as the planned “panda” and “samurai” bond issuances in China and Japan, respectively.

Dominguez noted that 2018 would be a good time to tap global debt markets before the US Federal Reserve again hike interest rates.

The Bureau of the Treasury plans to raise $1 billion in new money at the dollar bond issuance, more than the usual $500 million in recent years, to augment financing of the government’s higher infrastructure spending requirements under the ambitious “Build, Build, Build” program.

The Department of Finance was also eyeing to sell $200 million in three- to five-year panda bonds, or yuan-denominated debt paper issued in China by foreign governments or companies, in the first quarter of next year.

Dominguez last month said the panda bond issuance was delayed from an earlier plan to do so before this year ends as the Treasury was still awaiting final approval from the People’s Bank of China.

Dominguez had also said they plan to issue samurai bonds, yen-denominated IOUs issued in Tokyo by non-Japanese firms, sometime next year to “diversify” the sources of external financing.

In a related development, the Treasury last week announced that it will auction off a total of P240-billion worth of T-bills and T-bonds in the first quarter of 2018.

The domestic borrowing program for the period January to March next year was higher than the upward-adjusted P200 billion in the fourth quarter of 2017.

The Treasury will offer P20 billion in T-bills—P9-billion 91-day, P6-billion 182-day, and P5-billion 364-day—on Jan. 15 and 29, Feb. 12 and 26, as well March 12 and 26, National Treasurer Rosalia V. de Leon said in a Dec. 19 memorandum to government securities eligible dealers (GSEDs).