THE GOVERNMENT is set to return to Chinese and Japanese bond markets within 12-18 months as part of its financing program for next year.
At the sidelines of the second Economic Journalists Association of the Philippines forum in Manila City, Finance Secretary Carlos G. Dominguez said the government will offer renminbi-denominated “panda” bonds and yen-denominated “samurai” papers in the next 12-18 months to maintain its presence at the said markets.
“As I mentioned to the [Bureau of the] Treasury (BTr), I don’t want to be absent from any major market. The renminbi is the first issue we had… We probably will go back within 12 or 18 months. The same with Japan,” Mr. Dominguez told reporters yesterday.
He said issuing offshore bonds every year or 18 months “should be good for us” since the government had a hard time during its samurai bond issuance earlier this month.
“We learned that it’s very difficult to get back into a market if you are absent for eight years. We were not in the Japanese bond market for eight years and it was a little difficult.”
The Philippines raised a total of P154.2 billion, or about $1.39 billion, worth of samurai bonds. Broken down, the government borrowed P107.2 billion in three-year papers with a 0.38% coupon, P6.2 billion in five-year debt that fetched 0.54% and P40.8 billion in 10-year notes that fetched 0.99%.
Yen-denominated papers were last sold in 2010, when the government raised P100 billion worth of 10-year papers, fetching a 2.32% coupon.
Prior to this, the country raised 1.46 billion renminbi (RMB), or about $214 million, from its maiden panda bond sale in March. Fetching a 5% coupon rate, the three-year debt papers was more than six times oversubscribed at 9.22 billion RMB.
In January, the country also returned to the global bond market after four years, offering 10-year dollar-denominated global bonds worth $2 billion couponed at 3%.
Mr. Dominguez added that the government still does not have the offer amount for the bond issuances. “We have already done what we need to do and our plans for this year are already finished so we will see what goes on next year.”
National Treasurer Rosalia V. De Leon confirmed the Finance chief’s statement, saying the planned issuance will be part of the 2019 financing program.
“[The bond issuance] would be next year so that would again be part of the financing program for next year. So we will issue,” Ms. De Leon told reporters following yesterday’s Treasury bills auction, adding that the papers will also be “subject to the usual” market conditions.
The government plans to borrow up to P1.1989 trillion in 2019 to help fund its finance plan. This is 33.85% more than the P888.23 billion initially programmed for this year.
Of next year’s total, P891.7 billion will be sourced locally and P297.2 billion from external creditors. The Development Budget Coordination Committee in its July 2 meeting finalized a 65-35 borrowing ratio in favor of domestic sources for 2018, and a 75-25 ratio for 2019 to 2022.
Aside from panda and samurai bonds, Ms. De Leon said that the government is looking at entering the euro bond market as “a potential source of financing.”
“But of course, we have to watch out for the euro that [European Central Bank] might already start to taper the [quantitative easing] and might also begin the possible rate hikes,” the National Treasurer added.
Also planned some time in the future is a maiden offer of Islamic sukuk bonds.
“We are also looking at the sukuk. There would still some regulatory challenges there,” Ms. De Leon told reporters in July. — K.A.N. Vidal

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