MANILA, Nov 20 – The Philippines, one of Asia’s most prolific foreign debt issuers, is likely to cut planned overseas bond issues next year, with the government keen to rely more on the domestic debt market for its borrowing needs.
The Southeast Asian economy wants to reduce dependence on foreign borrowing by pursuing debt swaps and innovative deals such as local currency-denominated global bonds, to better manage its debt load and win investment grade rating.
Next year’s planned global bond sales will “most likely” be cut to US$1.5 billion (RM4.59 billion) to US$2 billion from an original programme of US$3 billion, National Treasurer Rosalia De Leon told reporters.
The government also plans to regularly issue US dollar-denominated bonds to local investors, as it seeks “to develop new funding sources in the local market,” De Leon said.
Fresh from an oversubscribed sale of US$750 million global peso notes early this month, the government will sell as much as US$500 million in dollar bonds to the domestic market at auction on Nov. 28, partly to help create dollar demand and contain the peso’s strength.
The peso is Asia’s best performing currency so far this year, up nearly seven per cent against the US dollar on strong foreign inflows into Philippine stocks and bonds with forecasts of sustained strong domestic growth. A Nov. 9 Reuters poll showed further currency gains were expected.
Before this month’s peso global notes, public debt to GDP stood at 42 per cent, down sharply from 68 per cent nearly a decade ago. Its interest payments now account for around a fifth of state spending from close to a third in 2005. – Reuters