$2B left in foreign borrowing program

THE GOVERNMENT has about a $2-billion borrowing space left for its planned “samurai” bond and second global bond sale under its program for foreign commercial loans this year, the Bureau of the Treasury (BTr) said.

According to Deputy Treasurer Sharon P. Almanza, the national government is tapping about $2.5 billion in official development assistance (ODA) and $4.2 billion in foreign commercial loans under the share of external borrowings in its 2018 loan portfolio.

With the issuance of $2 billion worth of 10-year dollar-denominated global bonds in January and $230-million renminbi-denominated three-year “panda” bonds in March, the government has about $ 2 billion left for its succeeding offshore bond offers.

“$4.2 billion for the entire commercial [ borrowing program] and then we already raised $2.2 [ billion]. So remaining $2 billion, but then it’s split between the samurai and dollar,” she told reporters last week.

However, Ms. Almanza said that Treasury officials “don’t know yet how much” will be allocated for each of the planned external bond sales.

“We issued the proposal already to banks,” she said, referring to the second dollar-denominated global bond sale.

Finance Secretary Carlos G. Dominguez III has said that the government was looking to offer the global bonds by “later third or early fourth quarter,” in anticipation of further policy tightening

by the US Federal Reserve, which has already raised its benchmark rates by 25 basis points so far this year in a meeting of its Federal Open Market Committee earlier this month and could implement two more hikes within 2018.

Mr. Dominguez also said the yen- denominated “samurai” bond sale could take place in September or October.

The government plans to borrow a total of P888.23 billion this year to help plug its budget deficit that is capped at three percent of gross domestic product, or P523.68 billion. Of this amount, 35% will be sourced from foreign creditors while the 65% balance will be borrowed locally.

The share of foreign loans was widened from 26% earlier programmed for 2018, and from 20% in 2017, in a bid to diversify its financing base and to tap lower interest rates.

From 2019 to 2022, however, the share of loans borrowed externally will be trimmed to 25%. —