Marcos administration borrows $3-B via second global bonds sale
MANILA, Philippines — The Marcos Jr. administration tapped the international debt market for the second time despite rising interest rates, with investors swarming the offering.
The Bureau of Treasury said Monday the government borrowed $3 billion during its second global bonds sale. The transaction is expected to settle by January 17.
The offer was divided into three tranches, with debt papers payable in 5.5, 10.5 and 25 years. The 25-year securities were issued as “green bonds” or under the government’s sustainable finance framework.
The latest fundraising activity came at a time of soaring interest rates as central banks around the world match the US Federal Reserve’s aggressive tightening actions amid stubbornly high inflation stateside. At home, the Bangko Sentral ng Pilipinas’ policy rate now stands at 5.5%, with more rate hikes to come.
The Treasury said the “opportunistic” bond float “attracted strong interest across all tranches” that borrowing costs were lower than what the government had targeted. Interest rates charged for the bonds, as gauged by a coupon rate, stood at 4.625% for the 5.5-year bonds, 5% for the longer dated 10-year bonds, and 5.5% for the 25-year papers.
“The robust demand for our first international bond offering in 2023 represents a strong vote of confidence by international investors,” said Finance Secretary Benjamin Diokno.
The Marcos Jr. administration made its debut in the global capital markets in October 2022 where it raised $2.5 billion from the issuance of global bonds.
The previous Duterte administration tapped the international debt markets twice in 2022. It did so in March 2022 via a $2.25 billion triple-tranche bond offer, and ¥70.1 billion four-tranche Samurai bond offer in April.
The state’s debt stock is comprised mainly of domestic liabilities (70%), since the national government explained it would protect the debt pile from foreign currency fluctuations. Even then, the government remains P13.64 trillion in debt as of November 2022.
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