THE Philippine government may soon offer euro-denominated bonds in a bid to raise more funds for budgetary support.
This possible return to the euro bond market may come more than a year after it successfully issued zero-coupon euro-denominated bonds in February 2020 wherein it raised 1.2 billion euros.
In an announcement on Monday, the government said it has appointed BNP Paribas, Credit Suisse, Goldman Sachs, J.P. Morgan, Nomura, and Standard Chartered Bank as Joint Lead Managers and Joint Bookrunners to arrange a series of fixed income investor meetings in Asia, Europe and the United States commencing on April 19th 2021.
“A proposed 4Yr and/or 12Yr and/or 20Yr euro-denominated US SEC-Registered Senior Unsecured Benchmark bond offering [the ‘Notes’] may follow, subject to market conditions,” it said.
The possible bond offering is expected to be rated Baa2 by Moody’s, BBB+ by S&P, and BBB by Fitch, it added.
Should the euro bond offering push through, this would be the country’s second offshore bond sale this year after it sold ¥55 billion ($500 million or about P24.2 billion) in three-year zero-coupon Samurai bonds last month. The country aims to borrow a total of P3.03 trillion this year, roughly the same amount it borrowed in 2020.
Bulk of the gross borrowings this year will be sourced locally at P2.58 trillion while P442.36 billion will be raised from foreign sources.
Most of the gross external borrowings will be sourced from bonds and other inflows at P286 billion while the remaining amount is programmed to be raised through program loans (P94.95 billion) and project loans (P61.42 billion).
The national government’s outstanding debt as of end-February this year soared to a new record high of P10.406 trillion as the government continued to borrow more money to respond to the raging Covid-19 pandemic.
Of the total debt stock, 29 percent was sourced externally while 71 percent are domestic borrowings.
Finance Secretary Carlos G. Dominguez III earlier said they expect the national government’s debt this year to reach 57 percent of GDP.
As of end-2020, the country’s debt-to-GDP ratio surged to 54.5 percent—a 14-year high —coming from a record-low 39.6 percent in the previous year. Apart from selling euro bonds, the Philippine government also raised funds from its two dollar bond sales in April and December last year.
It shelved its plans last year to issue Samurai bonds and renminbi-denominated panda bonds as the Bangko Sentral ng Pilipinas approved a P540-billion advance credit to help the government cover a budget deficit that swelled on the impact of the Covid-19 pandemic.
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