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PH ‘watchful for opportunities’ for another dollar bond sale in Q3

By: - Reporter / @bendeveraINQ
/ 06:13 PM January 22, 2019
Transparent dollar over Greek building

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Another issuance of dollar-denominated bonds may be in the offing by the third quarter on top of a return to the panda and samurai markets also this year, National Treasurer Rosalia V. de Leon said Tuesday.

De Leon told reporters after the T-bonds auction that, in general, the Bureau of the Treasury was “watchful of opportunities” in the external market, including euro and even “green” bonds.

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Early this month, the Philippine government sold $1.5 billion in new 10-year global bonds at 3.75 percent.

“If there is a compelling reason for us to go again to the market like in the dollar [by the] third quarter given where rates are, then we have to also assess for opportunities… I’m just saying that not because we’re already finished with the dollar [bond issuance], then we’ll stop looking,” De Leon said.

As for panda bonds, de Leon said the next offer of renminbi-denominated securities were already “on the table” as the Treasury had obtained pertinent clearances from the Bangko Sentral ng Pilipinas’ (BSP) Monetary Board as well as the Office of the President.

Along with yen-denominated samurai bonds, a spread-out “breather” of 8-12 months was scheduled by the Treasury for the next round of offshore bond issuances, she said.

In March last year, 1.46 billion renminbi (P12 billion) in three-year panda bonds were sold by the Philippine government for the first time in China at a 5-percent yield.

Last August, the Philippines also sold 154.2-billion yen (P74 billion) in samurai bonds across three tenors, ending the country’s eight-year absence in the Japanese debt market.

De Leon said the Philippines was diversifying its source of foreign debt even as the borrowing mix for this year remained 75-percent domestic, 25-percent external.

The government’s bias for locally sourced borrowings through the sale of treasury bills and bonds was intended to minimize foreign exchange risks.

Besides offshore bond issuances, foreign borrowings will also come from grants and loans or official development assistance (ODA) from multilateral lenders as well as bilateral partners.

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De Leon said the higher borrowings for 2019 will not only finance the wider budget deficit cap but also provide funds for the Duterte administration’s ambitious “Build, Build, Build” infrastructure program.

Government borrowings had been programmed to breach the P1-trillion mark this year.

“It’s also helping provide stimulus to the economy to achieve the growth targets—that’s part of the assumption for achieving the 7-8 percent growth target [for 2019]. Particularly at this time, if we are going to look at the global outlook, there should also be that stimulus provided by the government and more for productive spending because that’s infrastructure,” de Leon said, citing the slower global growth expected this year by multilateral lenders such as the International Monetary Fund and the World Bank.

Meanwhile, the Treasury sold all P20 billion in new 20-year T-bonds it offered Tuesday at a coupon rate of 6.75 percent.

Tenders for the treasury bonds reached P50.921 billion, making the auction over 2.5 times oversubscribed, such that the Treasury again opened the tap facility to sell more IOUs to government securities eligible dealers (GSEDs) as well as the over-the-counter window for state-run corporations, local governments and other tax-exempt institutions. /atm

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TAGS: Bonds, dollar-denominated bonds, Rosalia V. de Leon
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