Philippines to tap debt market anew  

MANILA, Philippines —  The Philippines will continue to tap the debt market as it targets to issue more dollar bonds and possibly other foreign currency bonds.

In an interview with Bloomberg TV, Finance Secretary Benjamin Diokno said the Philippines is planning to borrow more from the debt market following the huge demand in its recent global bond sale.

“Maybe pretty soon (we will issue). Mostly right now, dollars, but we can explore the Middle East because of the petrodollars,” Diokno said.

Petrodollars are crude oil export revenues denominated in US dollars.

“We are also planning to issue dollar-denominated retail bonds. This is for our overseas Filipino workers who would like to invest in this,” Diokno said.

“It is part of our financing program, which is 25 percent foreign and 75 percent domestic and so it’s within that range,” he said.

Retail dollar bonds are part of the government’s program to make government securities available to retail investors, especially individuals.

Apart from raising funds for the country’s priority projects, retail dollar bonds are issued to diversify funding sources of the government, as well as promote financial literacy and inclusion among Filipinos

The government also aims to develop the domestic capital market through the provision of a low-risk investment with more competitive yields than term deposits.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said it is good to further diversify the roster of global investors, especially focusing on global funds with large surplus to invest such as those in the Middle East.

He said doing so could somewhat help lower borrowing costs of the government.

“Given the huge bids and demand, there is still opportunity to tap more of their excess funds, such as the scheduled dollar retail bond offering,” Ricafort said.

“Large demand would help lower the borrowing cost of the government, in view of the need to finance the budget deficit. The borrowing cost also eased in recent weeks, so an opportunity for the government to lock in borrowings,” he said.

Earlier this week, the Philippines raised $3 billion from the international debt market through the issuance of triple-tranche global bonds, as it took advantage of high demand and lower interest rates to finance the country’s budgetary requirements.

The government raised $500 million from the issuance of 5.5-year tenor bonds with a coupon rate of 4.743 percent while $1.25 billion was raised from the issuance of bonds with maturity of 10.5 years and a rate of five percent.

Its 25-year sustainability bond fetched an average of 5.5 percent and raised another $1.25 billion.

Overall demand was also higher this time around as the order book peaked at around $28.2 billion for all tranches, upsizing the transaction from an initial target issue of just $2 billion.