THE government raised a total of P995 billion in 2019 from both domestic and external sources, the Department of Finance (DoF) said.
Citing a report from the Bureau of the Treasury, the DoF said 70% of total gross borrowing last year was sourced from domestic lenders, generating P693.8 billion, while the remaining 30% were from external sources.
Of the external sources, P185.7 billion were raised through global bonds, P37.06 billion via project loans and P78.2 billion in program loans.
The government conformed with the target 70:30 borrowing mix, adopted to minimize exposure to external risks while developing the domestic debt market.
“This proactive borrowing strategy took advantage of positive market developments to secure tight pricing for our global bond issuances,” National Treasurer Rosalia V. de Leon was quoted as saying.
The government kicked off 2019 by issuing $1.5 billion via 10-year dollar-denominated global bonds in January priced at 110 basis points (bps) above benchmark US Treasuries, followed by the 750 million euros raised from the European debt market at 70 bps above benchmark in May.
The Treasury also raised 2.5 billion renminbi via three-year “panda” bonds in May priced at a spread of 32 bps and another 92 billion yen from multi-tranche samurai bonds in August at a weighted average spread of 37 bps.
“We issued in the currencies of our top trading partners and in jurisdictions with abundant savings but low return opportunities, thus preserving the scarcity value of Philippine dollar bonds and the tightness of our sovereign issue spreads,” Ms. de Leon said.
Back home, the Treasury also had its first online offering of retail treasury bonds, which raised P235.8 billion in February with a coupon of 6.25%, amid strong demand.
Also last year, the Treasury launched its maiden issue of “Premyo Bonds” in December, to attract more small investors to invest in government securities, by offering tickets for quarterly raffle draws for every P500 invested, aside from the coupon.
The one-year Premyo bonds raised P4.961 billion, upsized from the initial P3 billion offer.
“Both retail issuances were complemented with regional and provincial roadshows, which included financial literacy sessions for individuals and treasury officers of cooperatives and local government units (LGUs),” Ms. de Leon said.
The government also tapped the global capital market through $225 million worth of catastrophe-linked bonds last year through the World Bank, providing the country protection against damage from earthquakes and typhoons until 2022.
Moving forward, Ms. de Leon said the Treasury is still working on the indemnity insurance program for government strategic assets such as schools and roads, among others, with a maximum premium of P2 billion. This will provide insurance protection against typhoons, earthquakes, storm surges, floods and volcanic eruptions, with the payout based on actual losses.
Despite higher borrowings, the debt to gross domestic product ratio, the share of government debt stock to the economy, still declined to 41.5% last year from 2018’s 41.7%.
Finance department Chief Economist Gil S. Beltran has said the debt ratio could even further decline to as low as 40% by 2022. — Beatrice M. Laforga