Goverment mulls new global bond issue

MANILA, Philippines — The government plans to borrow anew from the foreign market by issuing another set of global bonds, but will first look into risks on maturities and currency exchange before proceeding.

Finance Secretary Carlos Dominguez yesterday said the government may return to the bond market abroad, but has yet to determine its timing to make sure that the benefits of the financing outweigh its costs.

Dominguez said the government is looking into risks on yields and maturities, as well as the peso’s weakening, as factors for issuing additional global bonds.

“We are looking at possible issuance of bonds. We issued three very successful bonds this year, (including the) $3 billion in the US market,” Dominguez said in a TV interview.

“We have issued $2.5 billion equivalent in euros and around $500 million in the samurai market. All were very well received. Now we are looking at three items that we look at always: what are the coupon rates that people are willing to take; what are the tenors (since) we want to stretch our tenors further, and of course what is the exchange rate risk,” he said.

Dominguez said the government is assessing how to stretch the payment terms to allow the country more time to rebuild its resources before paying the debts amassed during the pandemic.

Further, Dominguez said the economy is shielded by its gross international reserves that amounted to $107.16 billion as of September, exceeding the country’s external debt stock of $101.2 billion as of the first semester.

New York-based Fitch Solutions earlier warned that the Philippine peso would see its value deteriorate with the government’s struggle to contain the spread of the virus.

“We have a total of almost $108 billion in reserves as against our total debt of around $100 billion. We are very comfortable that our foreign exchange reserves will see us through any possible challenges on the pestle,” Dominguez said.