THE Bureau of the Treasury is set to sell benchmark-sized 10-year and 25-year dollar-denominated bonds as the number of confirmed cases of Covid-19 continues to rise in the country.
This is the second time that the Philippine Treasury will tap the offshore bond market this year after selling $1.33 billion from euro-denominated bonds early this year.
While the Treasury has yet to disclose the amount it plans to raise through the dollar bond sale, benchmark-sized dollar bonds usually amount to at least $500 million to $700 million.
This also comes at a time that the government aims to raise more funds to finance its response to the pandemic.
In January 2019, the Philippines raised $1.5 billion from the sale of dollar-denominated global bonds.
At the same time, the Treasury also upsized the volume of debt papers it awarded in Monday’s auction as it sold P24 billion in Treasury bills (T-bills) on the back of strong demand for government securities buoyed by liquidity boost.
Rates for across all tenors also went lower compared to the previous auction and secondary market rates. The 91-day, 182-day and 364-day T-bills fetched averages of 2.617 percent, 2.831 percent and 3.054 percent, respectively.
“Market flushed with liquidity and rates dropped with reassuring statements from [Bangko Sentral ng Pilipinas] Governor [Benjamin Diokno.] Additionally, NG [national government] resources augmented by ODA [official development assistance] inflows and NG announcement of issuing in dollar market,” said National Treasurer Rosalia V. de Leon in a Viber message to reporters.
Monday’s auction was also more than 4.5 times oversubscribed, with total bids reaching P91.1 billion, prompting the committee to double the accepted noncompetitive bids for the 91-day and 182-day securities to P4 billion each.
With the decision, the Treasury raised a total of P24 billion, higher than the P20 billion initial offer.
On top of upsizing the issuance, the Treasury on Monday also decided to open the tap facility for an additional P10 billion for 364-day T-bills. The Treasury fully awarded P10 billion in 364-day T-bills as tenders reached P16.556 billion.
To fund its battle against Covid-19, Indonesia—the country’s Southeast Asian neighbor—also recently raised $4.3 in dollar bonds, which included its longest-dated debt paper of 50-year bonds, according to international reports.
ADB, WB loans
Finance Secretary Carlos G. Dominguez III earlier said the government plans to borrow $5.7 billion in loans from Asian Development Bank (ADB) and the World Bank.
Finance Undersecretary Mark Dennis Y.C. Joven also told BusinessMirror they are “exploring all ODA financing options to ensure that financing costs are minimized and tenors prolonged.”
Last Thursday, the Manila-based ADB approved lending $1.5 billion to the Philippines—the largest budgetary support it granted—to boost the government’s war chest against Covid-19.
Last month, the country also secured a $3-million grant from ADB.
The Washington-based lender, meanwhile, has also so far approved a $100-million loan to the Philippines on top of a $500-million loan to help it fight Covid-19.
As of April 27, the Department of Health reported that the total number of Covid-19 cases in the country has reached 7,777, including 198 new cases.
Total recoveries have reached 932, with 70 new ones.
The Covid death toll in the country reached 511, with 10 new deaths.