Government borrowings more than double in May

MANILA, Philippines — The national government’s borrowings more than doubled last May following the issuance of global bonds in the European and Chinese debt markets, according to the Bureau of the Treasury (BTr).

According to the latest data from the Treasury, gross borrowings last May jumped by 117.51 percent to P126.09 billion from P57.97 billion in the same month last year.

This brought the government’s total borrowings to P787.61 billion in the first five months, 161.8 percent up from P300.84 billion in the same five-month period.

The government borrows from both local and foreign creditors to plug its fiscal deficit, which is capped at 3.2 percent of the 2019 gross domestic product (GDP).

Treasury data showed that 59.6 percent of the total debt last May came from foreign creditors, while the remaining 40.4 percent was sourced from domestic lenders.

External financing surged significantly to P75.18 billion last May from P2.53 billion a year ago.

The BTr said the bulk or P62.83 billion of the amount was raised through the issuance of global bonds in the European and Chinese debt markets. 

The Philippines returned to the European debt market in early May, raising 750 million euros from the issuance of eight-year global bonds.

The debt papers were priced at a coupon rate of 0.875 percent, 70 basis points over benchmark. This yield is also tighter than the initial pricing guidance of plus 90 to 100 basis point range.

A week after, the Philippines also tapped the Chinese onshore market, issuing 2.5 billion renminbi-denominated panda bonds with a three-year tenor.

The securities fetched a coupon rate of 3.58 percent, translating to a tight spread which is 32 basis points above the benchmark.

In addition, the Philippines also received P6.34 billion in project loans and P6 billion in program loans from multilateral agencies and development partners during the period.

On the other hand, the Treasury said domestic borrowings last May dropped by 8.17 percent to P50.91 billion from P55.44 billion in the same month last year.

Majority or P40 billion of this was raised from the issuance of fixed-rate Treasury bonds, while the remaining P10.91 billion came from Treasury bills.

In 2018, the national government borrowed P947.55 billion from both domestic and foreign lenders, up 5.09 percent from P901.67 billion in 2017.

For 2019, the national government is expected to borrow P1.19 trillion, 20 percent higher than the 2018 program of P986 billion, in expectation of the higher fiscal deficit ceiling this year.

Of the total borrowings this year, P297.2 billion is projected to come from foreign lenders, while the remaining P891.7 billion would be sourced from domestic creditors.