Government debt soars to P7.76 trillion

MANILA, Philippines — The Philippines’ debt pile rose to P7.76 trillion as of end-January following the government’s issuance of euro-denominated offshore bonds during the month, the Bureau of the Treasury (BTr)  reported yesterday.

According to the latest data from the BTr, the national government’s outstanding debt as of end-January went up by 0.4 percent to P7.76 trillion from P7.73 trillion in December last year.

The BTr attributed the increase to the net availment of foreign financing, particularly euro-denominated bonds issued by the country in the international debt market in January.

The government borrows from both domestic and external lenders to plug the expected deficit in its budget which is capped at 3.2 percent of the 2020 gross domestic product (GDP).

Based on Treasury data, the bulk, or 66 percent, of the total debt pile came from domestic lenders, while the remaining 34 percent was sourced externally.

Domestic borrowings amounted to P5.12 trillion as of end-January, 0.1 percent lower compared to the P5.13 trillion recorded as of end-December last year.

“For January, the reduction in domestic debt was mainly due to the net redemption of government securities amounting to P3.86 billion which more than offset the P30 million effect of peso depreciation on onshore dollar bonds,” the BTr said.

External debt, on the other hand, rose by 1.4 percent to P2.64 trillion as of end-January from P2.6 trillion a month earlier. 

“The increase in external debt was caused by the net availment of foreign loans amounting to P33.51 billion and the P2.72 billion effect of local currency depreciation on dollar-denominated debt. On the other hand, third-currency revaluation declined by P340 million,” the Treasury said.

The Philippines raised 1.2 billion euros (approx. $1.33 billion) in January from the issuance of three-year and nine-year global bonds.

The three-year notes secured a coupon rate of zero percent, 40 basis points over benchmark, while the nine-year bonds fetched a coupon rate of 0.70 percent, with a spread of 70 basis points above benchmark.

Meanwhile, the BTr said the government’s total guaranteed obligations in January slightly decreased by 0.1 percent to P488.29 billion from P488.75 billion in December.

“The lower level of guarantees was due to the net redemption of both local and foreign guarantees amounting to P460 million and P390 million, respectively,” the Treasury said.

The BTr said this was tempered by local and third-currency exchange rate fluctuations, which increased the value of external guarantees by P240 million and P160 million, respectively.