Issuance of foreign currency bonds proposed
MANILA – The Philippine government is keeping its plan to issue foreign currency bonds this year but timing depends on developments on the coronavirus disease 2019 (Covid-19).
National Treasurer Rosalia de Leon said they continue to monitor the situation, citing that about USD1 billion to USD1.5 billion is programmed to be sourced from US dollar-denominated paper and about USD1 billion worth of the yen-denominated Samurai bond.
“These are things that we have to continue to watch in terms of market developments given where we
are right now, and also the lingering impact of Covid-19. But we are taking advantage of the very liquid onshore market for our funding so you’ve seen that we’ve been making full awards because of the lower rates that we’re also receiving during the auctions,” she told journalists after the Treasury bills (Tbills) auction Monday.
De Leon said the plan to issue renminbi-denominated Panda bond, originally for March this year, is also on hold due to Covid-19, as well as the direction of terms and interest rates.
“Of course, there would be opportunities for other markets to be able to make up for possible take up from the Panda issuance. Also, we should not discount the onshore market which you see is very liquid,” she said.
In February last year, the government issued 92 billion yen-worth of multitranche Samurai bond.
After two months, the government issued RMB 2.5 billion worth of threeyear Panda bond, the second for the Philippine government after its initial issuance in March 2018.
De Leon said borrowing from domestic lenders is a “good option” to date given the drop in interest rates due to expectations for additional cuts by the Bangko Sentral ng Pilipinas (BSP), among others.
“And of course, that would also mitigate foreign exchange risks on our end,” she said.
Despite the delay in the implementation of this year’s programed foreign currency-denominated bond issuances, de Leon discounted negative impact on government financing, saying “we have sufficient liquidity to be able to meet our budget requirements for the second quarter this year.”
“There could be some adjustments in the borrowing program but it would not be very huge increase in terms of the borrowings of the national government because we could still see catch up in our revenue agencies and also include additional income from our GOCCs (government-owned and controlled corporation) via dividend declarations and other fees and charges collection by other revenue agencies and of course BTr income,” she added.