The National Government (NG) has returned to overseas debt markets for fiscal support, marking President Marcos’ foray into foreign commercial borrowing, according to Treasury Office data.
Based on a Treasury document seen by reporters on Wednesday, October 5, the Marcos administration launched US dollar-denominated bonds at three benchmark size tranches with five-year, 10.5-year and 25-year terms. year.
For the three tenors, the offer will be the size of a “benchmark in US dollars”, or at least 500 million dollars in market parlance.
The document showed that the initial price guidance for the five-year note is set at 155 basis points on the Treasury zone, while the 10.5-year paper is at 220 basis points on the zone. Treasury bills and the 25-year bond at the 6.550% zone.
The proceeds from the five-year and 10.5-year debt securities will be used for “general budget financing” while the 25-year IOU is “to finance/refinance assets in accordance with the sustainable financing framework of the Republic”.
For the latest offering, BofA Securities, Goldman Sachs, HSBC (B&D), JP Morgan, Morgan Stanley, SMBC Nikko, Standard Chartered Bank and UBS are joint bookrunners.
Last March, the Duterte administration also tapped the offshore debt markets with the same tenors of five years, 10.5 years and 25 years. The government raised $2.25 billion through this bond sale in three tranches.
For 2022, the Marcos administration plans to borrow 2.2 trillion pesos to support the country’s economic recovery. Most of it will be drawn from domestic creditors.
According to Finance Secretary Benjamin E. Diokno, the government intends to increase its local funding to 75% from around 73% between 2016 and 2021.
In August, the GN’s gross borrowing reached P1,379 billion, down 42% from P2,387 billion in the same period of 2021.
In the first eight months, the NG’s total borrowing from local creditors reached P1,041 billion, compared to P1,929 billion a year ago.
Foreign borrowings also decreased at the end of August by 26%, from 458.51 billion pesos to 337.79 billion pesos.
On September 30, the Treasury Office reported that NG’s total debt stood at 13,021 billion pesos in August, an increase of 12% or 1,379 billion pesos from the 11,642 billion pesos it a year ago.
Of this amount, 68.7% were domestic borrowings while 31.3% came from foreign creditors.
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