Gov’t eyes fresh dollar bond issuance before yearend

THE government is eyeing another dollar-denominated bond sale this year in anticipation of further tightening in US monetary policy, the Finance department said.

Asked whether the government is eyeing another dollar bond issuance this year, Finance Secretary Carlos G. Dominguez III told reporters in a mobile message yesterday: “confirmed.”

He said the issuance may happen late in the third quarter or early in the fourth quarter of the year.

Asked why the government is considering a second dollar bond issue this year, Mr. Dominguez said it wants to secure more funds at lower rates in “anticipation of [the] Fed’s moves.”

The US Federal Reserve raised its borrowing rates by 25 basis points in its March meeting, and is eyeing two more hikes this year.

However, the Finance chief said the government has “not yet” determined the possible issue size and the tenor to be offered.

He said proceeds from the second dollar bond issue will likely be used for the government’s infrastructure projects and to fund upcoming debt maturities.

In January, the government sold $ 2 billion 10-year dollar- denominated bonds, with $ 750 million allocated to new money investors and quoted at a 3% coupon, and the remaining $1.25 billion switched in a liability management exercise.

The Duterte administration made its first dollar bond issuance in January 2017 after it sold $500 million in new money from 25-year papers at a coupon of 3.7% and swapped the remaining $1.5 billion to lengthen maturities.

The government plans to borrow a total of P888.23 billion this year to fund its budget deficit that is capped at 3% of the country’s gross domestic product.

The Development Budget Coordination Committee last month raised the share of loans to be sourced abroad this year to 35% of overall borrowings from the 26% earlier expected for this year and the 20% set in 2017 as the government seeks to diversify its funding sources.

The government has been active in the offshore market this year. In March, the government raised 1.46 billion renminbi, or about $230 million, in three-year yuan-denominated bonds with a coupon rate of 5%.

Mr. Dominguez earlier said the government is eyeing to tap the Panda bond market as a regular financing option.

Apart from dollar and renminbi bonds, the government is also looking to offer yen-denominated or “Samurai” bonds in September or October, the Finance chief earlier said.

The government is ramping up borrowings as it seeks to spend about P8.4 trillion in infrastructure projects within its term in an effort to boost economic growth to 7- 8% in 2022 from the 6.7% recorded in 2017 and the 6.3% average logged in 20102015. —