No more foreign borrowing for PH in 2013

MANILA, Philippines – The Philippines, one of the most active players in the global bond market, will no longer tap the foreign commercial debt market this 2013.

This was confirmed by National Treasurer Rosalia de Leon on Tuesday, April 23. The Philippines traditionally issue global bonds in the first months of the year to plug expected gaps in government’s revenues and spending.

“We’re not issuing any offshore commercial borrowing (this year) but we will still continue to avail of the official development assistance (ODA),” De Leon told reporters.

The government originally planned to borrow roughly $3 billion from the commercial debt market but this would no longer push through, she added.

De Leon said the Philippines is going for the ODA route because of the concessional interest rates, or rates that are often lower than commercial loans. “ODA (loans) have concessional rates and we already have a regular program with our development partners,” she said.

The government had programmed to borrow $1.2 billion to $1.5 billion worth of ODA loans this 2013.

These will help fund the budget deficit target of P238 billion for 2013, equivalent to about 2% of the Philippine economy.

Strong peso

Finance Secretary Cesar Purisima earlier said that the government would be sourcing its 2013 requirements locally to help monetary authorities temper the appreciation of the peso against the dollar.

“We coordinate with the BSP. We work with them in terms of stemming the peso appreciation,” she said.

A strong peso trims the dollar earnings of key sectors, including outsourcing and exports, as well as the peso equivalent of remittances that Filipinos working overseas send home to their loved ones.

Local debts

For its local borrowings, the government is considering to do a follow-up on its onshore dollar bond offerings and possibly.

“We’re also exploring possibilities for inflation-linked bonds,” De Leon said, referring to financial instruments that have a principal amount that is linked to inflation. These instruments reduce the inflation risk of the investment.

For onshore dollar bonds, De Leon said the Philippines may issue at least $500 million worth of dollar-denominated bonds to local investors in the latter part of the year.

In November 2012, the Philippines sold $500 million from the sale of 2032 US dollar-denominated bonds to local investors. – Rappler.com