OUTSTANDING government debt rose in January to record levels after increased domestic and foreign debt, tempered by a stronger peso, the Bureau of the Treasury (BTr) said.
National government debt was at a record P7.494 trillion at the end of January, up 2.8% or from December. The debt stock was also higher from the P6.726 trillion posted a year earlier.
The bulk of the loans were from domestic sources at P4.91 trillion in January, up 2.8% from the P4.777 trillion in the previous month.
The Treasury attributed this to the net issuance of government securities in January at P133.18 billion, tempered by downward valuation of domestic dollar bonds at P200 million, after the peso strengthened.
During that month, the peso averaged P52.4679 against the dollar in January, compared with a P52.7691 average the previous month.
On the other hand, funds raised from foreign sources accounted for P2.584 trillion, up 2.7% from the end of December. The rise in overseas debt was mainly due to higher foreign loan availments worth P83.29 billion during that month.
The government returned to the international capital markets in January, selling $1.5 billion worth of dollar bonds.
The 10-year securities, at a coupon of 3.75%, were priced 110 basis points (bp) above benchmark US Treasuries, narrower than the initial 130 bps guidance.
The rise in foreign debt in January was offset by the P14.61 billion revaluation impact of the peso, with the weaker dollar decreasing the value of dollar-denominated debt by P19.24 billion. This however was tempered by the increase in value of third currency debt by P4.63 billion.
Meanwhile, guaranteed obligations stood at P487.29 billion in January, down 0.1% or P301 million month-on-month.
“Peso appreciation which lowered the local currency value of external guarantees by P2.22 billion and net repayment on domestic guarantees of P0.52 billion underpinned the decline,” the BTr said.
However, this was partly offset by net availments on external guarantees of P1.40 billion and an upward revaluation of third currency-denominated guarantees by P1.04 billion.
The government plans to borrow up to P1.189 trillion in 2019 to help finance its spending plan, 33.85% more than the P888.23 billion initially programmed for this year.
Of this year’s total, 891.7 billion will be sourced domestically and P297.2 billion from overseas. The Development Budget Coordination Committee adjusted the borrowing ratio in favor of domestic sources to 75-25 for 2019, from the previous year’s 65-35 ratio.
The government is offering retail Treasury bonds to the general investing public, which can be bought in denominations of P5,000 until March 6.
National Treasurer Rosalia V. De Leon said demand for the RTBs could reach as high as P200 billion by the end of the public offer period, although the government may not accept all the bids.
Apart from the retail bond sale, the Treasury is also studying an offer of renminbi-denominated “panda” bonds next quarter as well as yen-denominated “samurai” bonds in the following quarter, in accordance with the government’s 12-month cycle of overseas bond offers. — Karl Angelo N. Vidal

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