THE Department of Finance has reiterated the strong confidence of the international business community in the Philippines under the Duterte administration, as reflected by the successful bond issuances in the offshore bond markets during 2018.
Finance Secretary Carlos G. Dominguez III pointed out that the tight spreads of these bond issuances also illustrate confidence in the way the Duterte administration has managed the country’s fiscal program.
The $2-billion, 10-year dollar bonds issued in January 2018 received a tight spread of 37.8 basis points over the United States Treasuries, while the 1.46-billion- renminbi, three-year panda bonds floated in March of the same year also fetched a spread of only 35 basis points over the benchmark.
The Philippines also returned to the yen-denominated samurai bond market after an eight-year hiatus, with a multitranche ¥154.2- billion transaction, or $1.39 billion, which yielded a weighted average spread of 34.7 basis points above benchmark.
National Treasurer Rosalia V. de Leon said that the government continues to watch global markets carefully in line with its bond issuances, looking to issue global bonds in 2019 as part of its financing exercise.
“[Finance] Secretary Dominguez has already made mention that we are not in such a hurry to issue [bonds], so we are watching markets very carefully…what we are just doing is really to watch all these developments closely and again look for a more accommodating window for us to be able to issue our ROP,” de Leon said.
Menu of funding tools
She also earlier pointed out that the government has a menu of funding instruments that it can tap for financing, namely retail Treasury bonds, Marawi bonds, as well as studying the markets for euro-denominated bonds, among others.
The finance chief said that with global uncertainties persisting as a result of the Federal Reserve System’s decision to continue raising interest rates, he had instructed de Leon to move the timelines of future bond issuances ahead of schedule.
Dominguez pointed out that with the positive and overwhelming response to the Philippines’s panda and samurai bond issuances, the government is likely to return to these markets every 12 to 18 months from hereon to establish a regular presence.
“Because of all the announcements and all the uncertainties that are going to start hitting more, impacting the market more, [it’s] better to bring the issuance forward earlier,” Dominguez said.
He explained that participating in the panda and samurai bond markets, as well as exploring other debt securities markets in and outside of Asia, would help diversify the government’s borrowing portfolio as it rolls out more of its “Build, Build, Build” infrastructure projects.
“And we are going to explore doing something in England,” he added.
