Gov't may borrow $500M locally

MANILA, Philippines - The government may opt to fund its remaining foreign commercial borrowing requirement of $500 million from the local debt market, fiscal authorities said yesterday.

Finance Secretary Cesar Purisima even said that if there is enough liquidity, the government may not even have to borrow. “If there’s high level of liquidity, should there still be a need to borrow?” Purisima said.

Another ranking Finance official, meanwhile said that with uncertainties in the global external environment, it may be good to just borrow from the local market.

“We’ll see if we can do it locally. There is volatility abroad and there is enough liquidity here. Interest rates are good here,” said the official.

Nonetheless, Purisima said the government may still proceed with its plan to borrow $500 million from the foreign commercial debt market if there is a good opportunity. “We might do it if there is opportunity for liability management,” Purisima said.

Barclays Capital has said in a recent report that the government’s strong cash position gives it room to postpone its plan to fulfill its remaining foreign commercial borrowing requirement for the year.

For next year, Purisima said the government is open to different fund-raising options. “We’re considering all instruments,” he said.

Finance Undersecretary Rosalia de Leon also said the Philippines is considering a host of options for next year’s fund-raising activities.

She said yesterday that the government is also considering inflation-linked bonds.

Inflation-linked bonds are indexed to the consumer price index and thus have lower coupon rates.

The government plans to borrow $4.02 billion externally next year, lower than the programmed $4.5 billion this year, according to the latest data from the Department of Finance (DOF).

Of the $4.02 billion, the government plans to issue $2.25 billion worth of bonds and to borrow $1.77 billion worth of program and project loans.

The government, meanwhile, has programmed domestic issuance of $12.2 billion or P549 billion.