Panda, euro bond sale push PH debt to new high of P7.916T in May

MANILA, Philippines–As the national government increased its foreign borrowings through the sale of panda and euro bonds in May, its outstanding debt climbed to a new high of P7.916 trillion at the end of the first five months.

A weaker peso last May also pushed the government’s outstanding obligations upward from P7.787 trillion at end-April, the latest Bureau of the Treasury data report released Wednesday showed.

Outstanding debt from domestic sources still accounted for the bigger share at two-thirds of the total, rising 1 percent month-on-month and 18.8 percent year-on-year to P5.256 trillion in May.

In a statement, the Treasury attributed the month-on-month increase in locally sourced debt to “net issuance of government securities amounting to P50.95 billion, which added to the P60-million revaluation of onshore dollar bonds due to peso depreciation.”

The peso weakened to 52.222:$1 last May from 52.098 against the greenback in April.

Meanwhile, external debt rose 3 percent month-on-month and 10.4 percent year-on-year to P2.659 trillion as of May.

The Treasury said the month-on-month increase in foreign debt came on the back of “currency fluctuations of both US dollar and third currency-denominated debt amounting to P6.14 billion and P10.09 billion, respectively.”

“At the same time, net availment of foreign loans amounted to P61.48 billion including 750 million euros in eurobonds as part of the national government’s effort to diversify funding sources for infrastructure investment and human capital development,” it added.

In May, the Philippines sold 750 million euros in eight-year global bonds at a coupon rate of 0.875 percent, ending the country’s 13-year absence in the euro market last tapped in 2006.

A week later, the Philippines sold 2.5 billion renminbi in three-year renminbi-denominated panda bonds at a coupon of 3.58 percent, marking the country’s second straight year in tapping China’s debt market.

The latest Department of Finance (DOF) data showed that the share of government debt to the economy rose to 44 percent in the first quarter as the increase in domestic borrowings outpaced the four-year low economic growth.

The national government debt-to-gross domestic product (GDP) ratio at end-March increased from 42.6 percent a year ago, DOF Undersecretary and chief economist Gil S. Beltran earlier said.

To recall, first-quarter GDP growth fell to 5.6 percent year-on-year mainly as the government underspent P1 billion a day on public goods and services due to delayed approval of the P3.7-trillion 2019 national budget.

Last year, the full-year debt-to-GDP ratio stood at 41.9 percent, and the Cabinet-level, interagency Development Budget Coordination Committee (DBCC) expects the share to remain at the same level this year.

For 2019, the government had programmed gross borrowings amounting P1.2 trillion, of which the bulk or P906.2 billion will be sourced locally through the sale of treasury bills and bonds. (Editor: Jonathan P. Vicente)