Government secures $4.858 billion loans for COVID response

MANILA, Philippines — The government has secured $4.858 billion in loans and grants from foreign lenders and multilateral institutions to finance its coronavirus disease 2019 (COVID-19) response, according to the Department of Finance (DOF).

In a report posted on its website, DOF said the agency has so far raised $4.75 billion in budgetary support financing from the Asian Development Bank (ADB) and World Bank as well as the offshore commercial debt market for COVID-19 programs.

DOF said another $108 million worth of grants and loan financing have also been secured for various projects to be implemented by agencies involved in the virus response.

Of the total borrowings, DOF said $4.05 billion has already been disbursed to the government as of May 14.

Last April, DOF and ADB signed a $1.5 billion loan agreement for the COVID-19 Active Response and Expenditure Program, plus another $200 million loan for the Social Protection Support Project.

The ADB also extended grants amounting to $3 million for the COVID-19 Emergency Response Project and $5 billion for the Rapid Emergency Supplies Provision last March.

The World Bank, for its part, extended in November last year a $200-million loan for the Social Welfare Development and Reform Project.

In April this year, World Bank signed another $500 million loan agreement with the Philippines for the Third Disaster Risk Management Development Policy Loan.

It also provided $100 million in loan financing for the COVID-19 Emergency Response Project of the Department of Health.

The copies of the agreements for these loans and grants are available on the DOF’s website.

Meanwhile, the Philippine government last April sold $2.35 billion worth of dollar-denominated global bonds, priced at the lowest coupon rate ever achieved for these debt papers despite market volatility caused by COVID-19.

Of the total debt papers issued, $1 billion came in the form of 10-year global bonds, which fetched a coupon rate of 2.457 percent.

This was 40 basis points tighter than the initial price guidance for the securities, which was 220 basis points above benchmark.

Another $1.35 billion was raised from the sale of 25-year global bonds, priced at 2.95 percent which was 42.5 basis points tighter than the initial pricing guidance of 3.375 percent.