Another dollar bonds issue in Q3 possible

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

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

Early this month, the 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 dollar market [by the] third quarter given where the rates are, then we have to assess the opportunities … I’m just saying that not because we’re already finished with the dollar [bond issuance], we’ll already stop looking,” de Leon said.

As for panda bonds, she 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 to 12 months was scheduled by the Treasury for the next round of offshore bond issuance, 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 in favor of domestic 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 in the form of grants and loans or official development assistance (ODA) from multilateral and bilateral lenders.

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

Government borrowings was 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 to 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, noting the slower global growth expected this year by multilateral lenders such as the International Monetary Fund and the World Bank.

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

Tenders for the treasury bonds reached P50.921 billion, making the auction more than 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.