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PHL open to more global bond offerings

REUTERS

THE GOVERNMENT is open to raising more funds through global bonds as it evaluates coupon rates and exchange rate risks, the Finance chief said on Thursday.

“We are looking at a possible issuance of bonds,” Finance Secretary Carlos G. Dominguez III said in an interview with Bloomberg Television on Thursday.

He said the government would assess coupon rates, tenors, and exchange rate risks before making a decision.

“That is the most important thing now — we want to stretch our tenors further. And of course, what is the exchange rate risk?” Mr. Dominguez said.

“So far, in our case, we have a total of almost a $108 billion in reserves against our total debt of around $100 billion. So, we’re very comfortable that our foreign exchange reserves will see us through any possible challenge on the peso.”

In a Viber message to reporters, Mr. Dominguez said that “all options are open as we evaluate the alternatives against longer tenors, lower cost and less exchange rate risk.”

This year, the government raised $3 billion (P146 billion) from the sale of US dollar-denominated global bonds in a dual-tranche offering.

It also raised EUR2.1 billion (P122.4 billion) from a triple-tranche offering of euro-denominated bonds and JPY55 billion (P24.2 billion) from a three-year, Japanese yen-denominated Samurai bond offering.

The government last month also raised an initial $866.2 million (P43.81 billion) from its maiden offering of retail dollar bonds targeted at individual investors after a series of promotional events aimed at Filipinos working overseas.

“We were quite surprised that the uptake was actually four times more than we expected,” Mr. Dominguez said.

He said that a 60% debt-to-GDP ratio is still achievable for the country, noting that the economy could be “very robust as soon as the restrictions on mobility are lifted.”

As Metro Manila transitions to less restrictive coronavirus lockdown restrictions that would allow more business activity, Mr. Dominguez said that the government expects to meet the 4-5% gross domestic product (GDP) target.

“We still quarantine areas depending on the number of (coronavirus) cases they have so it’s very, very targeted and we expect our economy to really start opening up this quarter,” he said.

Second-quarter GDP grew by 11.8% year on year, bringing average growth to 3.7% in the first half. The Philippine economy contracted by a record 9.6% in 2020 due to long and stringent lockdowns in the capital.

The capital region will be placed under Alert Level 3 from Oct. 16 until the end of the month. — Jenina P. Ibanez

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