The Bureau of the Treasury (BTr) has raised nearly a trillion pesos in 2019 to finance government operations, which the Department of Finance (DOF) said was done through a proactive borrowing strategy that reduced the government’s exposure to foreign exchange risks.
The DOF said in a statement yesterday the government borrowed P995 billion in 2019.
The amount is 10.85 percent higher than the P897.6 billion gross borrowings recorded for 2018.
The DOF said domestic sources accounted for 70 percent of the government’s borrowings last year, achieving the BTr’s desired 70-30 financing mix that aims to reduce the country’s exposure to external risks while developing the local debt markets.
“This proactive borrowing strategy took advantage of positive market developments to secure tight pricing for our global bond issuances,” Rosalia de Leon, national treasurer, said in her yearend report to Carlos Dominguez, DOF secretary.
According to BTr’s preliminary data, about P185.7 billion in global bonds were issued, and P693.8 billion-worth of government securities.
External borrowings for 2019 also included P37.06 billion in project loans and P78.2 billion in program loans, the BTr said.
De Leon said the BTr tapped various investor markets to diversify the government’s borrowing portfolio by issuing $1.5 billion of 10-year global bonds in January last year, 750 million euros of ‘Euro’ bonds, 2.5 billion renminbi of ‘Panda’ bonds, and 92 billion yen of multi-tranche ‘Samurai’ bonds.
“We issued in the currencies of our top trading partners and in jurisdictions with abundant savings but low return opportunities, thus preserving the scarcity value of Philippine dollar bonds and the tightness of our sovereign issue spreads,” de Leon said.
She said the regular bond issuances in multiple markets also paves the way for the Philippines’ increased reliance on global bonds at minimal cost adjustments, in case access to official development assistance is diminished by the country’s ascension to upper middle-income status, which is expected ahead of schedule this year.
Last year also marked the BTr’s first online offering of retail treasury bonds (RTBs) and the “Premyo Bonds” or prize bonds, which both aim to further develop the retail market for bonds and encourage small savers to participate.
The five-year RTBs issued in February last year with a coupon of 6.25 percent was four times oversubscribed during its initial offering, and raised P235.8 billion over the offer period.
The maiden issue of the Premyo bonds, meanwhile, exceeded the BTr’s target of P3 billion, with P5.96 billion raised from the sale.
“Both retail issuances were complemented with regional and provincial roadshows, which included financial literacy sessions for individuals and treasury officers of cooperatives and local government units,” de Leon said.
As a result, de Leon said the 2019 debt-to-gross domestic product (GDP) ratio target of 41.72 percent is projected to improve to 41.59 percent despite the scaling down of the GDP forecast by the Development Budget Coordination Committee to 6-6.5 percent from 6-7 percent for that year.
The BTr based its projections on the November 2019 actual debt data and the December 2019 preliminary cash flow data.
The BTr also estimates savings from interest payments to have reached P40.3 billion in 2019, de Leon said.
