Government eyes $5 billion from global bonds

MANILA, Philippines — The Philippines plans to borrow $5 billion from the international debt market through various global bond issuances this year amid expectation of easing interest rates.

In a message to The STAR, National Treasurer Sharon Almanza said the programmed global bond issuance for 2024 is equivalent to $5 billion, almost the same as last year’s level.

“We don’t have the breakdown yet as this will depend on terms that will be favorable for the government and market conditions,” she said.

Deputy treasurer Erwin Sta. Ana, for his part, said the Treasury could not say for now what would be the first issuance for the year.

In 2023, a triple-tranche global bond was raised as early as the first week of January.

“We are still monitoring markets for issuance opportunities,” Sta. Ana said.

Last year, the Marcos administration borrowed $5.26 billion from the global debt market, just slightly higher by five percent from the programmed $5 billion.

Broken down, the initial $3 billion was secured via a triple-tranche global bond in January.

Another $1.26 billion from the first retail dollar bond (RDB) issuance was also secured in October.

The remaining $1 billion was borrowed from the maiden issuance of sukuk bonds as the government moved to diversify the country’s investor base.

Rizal Commercial Banking Corp. chief economist Michael Ricafort explained that the biggest market lead for 2024 is the continued expectation that the US Federal Reserve will cut rates by as much as 150 basis points this year, with the first move likely as early as March.

“The said Fed rate cuts could be matched locally as inflation moves closer to the BSP (Bangko Sentral ng Pilipinas) target of two to four percent,” Ricafort said.

“This is definitely a sweet spot for bond issuers, such as the national government, and for bond investors, as bond yields in the US and locally already eased from the immediate highs posted in the latter part of October 2023,” he said.

He warned that this could still be offset by recent signals that there will be no local policy rate cut soon and that the country is not yet out of the woods in ter