Samurai bond issue targeted for 2018 — DoF

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Samurai bond issue targeted for 2018 -- DoF
A bank teller counts 10,000 yen bank notes in Tokyo. -- AFP

THE GOVERNMENT could issue yen-denominated debt, or “samurai bonds,” next year, Finance Secretary Carlos G. Dominguez III said.

“I suppose the direction I am thinking, but we have to confirm it, is we’ll probably do a samurai bond sometime next year,” Mr. Dominguez told reporters last week when asked for a timetable.

However, Mr. Dominguez said a test of market conditions is needed before the government makes an offer.

“First to diversify our sources, we haven’t done a samurai bond in a long time, but we have to get indication, authority, appetite, will it be tapered, we’ll have to get indication on interest rates, what the exchange risks are going to be,” he said.

The Philippines last issued samurai bonds in February 2010, with ¥100 billion worth at a coupon of 2.32%.

The government also plans to raise $1 billion in dollar bonds as part of its borrowing program next year.

However Mr. Dominguez cited the US monetary policy tightening as a risk to the planned offer.

“It seems its clear the global economy is normalizing, the Fed has already announced a plan to [reduce] its balance sheet,” he said, adding that the next chairman of the Federal Reserve will be a factor in the issue.

“Who is going to be appointed there, what is their philosophy, we don’t know that so it’s up in the air. It’s better to be early than late.”

For 2018, the government is planning gross borrowings of P888.1 billion, with 80% to be sourced locally and 20% to be borrowed from foreign creditors.

Referring to the planned issue of panda bonds, “We decided that it was the right move to do it earlier than later, in preparation for our expenditure program for next year,” according to Mr. Dominguez.

The government plans to raise $200 million worth of yuan-denominated securities, or “panda bonds,” this quarter, possibly in three- and five-year tenors. — Elijah Joseph C. Tubayan