Philippines eyes retail Euro bond sale to help bridge budget gap
MANILA, Philippines — The Marcos Jr. administration warmed to the idea of floating Euro bonds to supplement its budgetary needs amid a tight fiscal space.
The plan is still in the works, according to Finance Secretary Benjamin Diokno, considering the Germany-based Filipinos initially sparked interest in the proposal.
“I’m sure there will be strong demand, especially among seniors since they flush with cash,” he told reporters in a Makati Business Club forum on Friday.
The Euro-denominated bonds, if initiated, will be sold to retail investors. When these bonds will be put up for sale is still unknown.
The Marcos Jr. administration has tapped international debt markets twice for its spending needs since taking office.
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The first was in October 2022, when it was able to borrow $2 billion from dollar denominated bonds sold in three tranches, with debt papers payable in five, 10.5 and 25 years.
The second came at the start of the year. The national government borrowed $3 billion from this global bond sale divided into three tranches. The 25-year tranche were green bonds sold under the state’s sustainable finance framework.
The previous Duterte administration tapped the international debt markets twice in 2022. It did so in March 2022 via a $2.25 billion triple-tranche bond offer, and ¥70.1 billion four-tranche Samurai bond offer in April.
The state’s debt stock is comprised mainly of domestic liabilities (70%), since the national government explained it would protect the debt pile from foreign currency fluctuations.
The Marcos Jr. administration is operating with a budget deficit since inheriting a mountain of debt, which fattened as a result of the previous Duterte administration’s borrowing spree to fund its pandemic response. Treasury data showed the state’s debt pile sagged 1.7% month-on-month to P13.42 trillion in December 2022.
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