The Marcos administration is set to return to the international debt market with the sale of more US dollar-denominated bonds.
It was unclear as of press time how much the government is raising this time around, with the Bureau of the Treasury (BTr) saying only it was “benchmark-sized.” The term generally means at least $500 million.
To be offered in tranches, the bonds will mature in 2030, 2035 and 2049.
READ: Moody’s affirms PH investment grade rating
The proposed bond issue received an investment-grade rating from Fitch Ratings, S&P Global Ratings and Moody’s Ratings, thus aligning with the overall credit score earlier awarded to the Philippine government.
In a statement, Moody’s Ratings assigned the new bonds a senior unsecured rating of “Baa2.”
“The proceeds from the bonds are intended for general purposes including budgetary support. A portion of [the] tranche maturing in 2049 is also intended for eligible projects under the Philippines’ Sustainable Finance Framework,” Moody’s said. The framework refers to policies supporting sustainability commitments that enable “environmentally and socially responsible business decisions.”
S&P Global Ratings issued a “BBB+” rating while Fitch ratings gave the fresh bonds a “BBB.”
Adequate capacity
These ratings indicate varying levels of credit risk, but generally mean that the borrower has adequate capacity to meet its financial commitments.
The government had earlier disclosed plans of borrowing $5 billion this year, of which $2 billion was already raised last May.
It was the Marcos administration’s first-ever dollar bond issuance. The IOUs were in tenors of 10 years and 25 years.
The government borrows from local and foreign sources to help plug a budget deficit, which it capped at P1.48 trillion or 5.6 percent of gross domestic product for this year.
It is targeting to borrow P2.57 trillion this year, with 75 percent of the borrowings sourced domestically and the remaining 25 percent from offshore investors. It will then adopt a borrowing mix of 80:20 next year, with the biggest chunk from domestic loans.