The Duterte administration is set tap the overseas debt markets anew, marking its third commercial borrowing for the year, to support the national government’s wider budget deficit ceiling.

On Monday, June 28, the Bureau of the Treasury announced the launching of a benchmark-sized US dollar bond offering, with tenors of 10.5 years and 25 years.

Based on Treasury document given to reporters, the initial price guidance for the 10.5 year bond is at around the level of Treasuries plus 90 basis points, while the 25 year note is at 3.55 percent.

National Treasurer Rosalia de Leon said the proceeds from the fresh commercial borrowing is for “general budget support.”

The Philippines tapped Bank of China, Deutsche Bank, Goldman Sachs, Morgan Stanley, Mitsubishi UFJ Financial Group, Standard Chartered and UBS as joint bookrunners.

The Duterte administration has programmed $7 billion in commercial borrowing for 2021. It has so far raised $3 billion from recent yen- and euro-denominated bond sales.

Last April, the government raised $2.5 billion from a triple-tranche offering of euro-denominated bonds, and $500 million from the issuance of three-year Japanese yen-denominated “Samurai” bonds in March.

The government has been very active in its borrowing program in recent months to plug the widening budget deficit amid dwindle tax revenues and higher spending due to prolonged pandemic.

Data from the Treasury bureau showed that the Duterte administration’s total gross borrowings from both local and foreign creditors hit P1.65 trillion in January to April, higher by 35 percent compared with P1.22 trillion in the same period last year.

Bulk of the borrowings were sourced domestically, amounting to P1.41 trillion. This amount rose by 43 percent from P982.13 billion a year earlier.

The government’s foreign financing in the first four-months of the year, meanwhile, amounted to P245.25 billion, up 3.3 percent compared with P237.33 billion in the previous year.

Earlier, Finance Secretary Carlos G. Dominguez III said the national government will borrow P3 trillion this year. Of that amount, 75 percent of it will be sourced from the domestic market.

At end-April 2021, the national government’s debt burden zoomed 28 percent to P10.991 trillion from P8.6 trillion in the same month last year.

Of the total debt stock, 71.1 percent were domestically borrowed, while 28.9 percent were sourced from external creditors.

Source: Manila Bulletin (