MANILA, Philippines — The Duterte administration plans to tap the samurai bond market before ending its term in June, as it studies its options in raising its finances given the challenging environment.
Finance Secretary Carlos Dominguez III said the government may turn to yen-denominated securities, known as samurai bonds, if the debt market fails to stabilize due to the ongoing conflict between Russia and Ukraine.
“Definitely, we’re looking at the samurai market,” Dominguez said in a TV interview, when asked for any offshore offerings before stepping down as finance chief in June.
Dominguez also said the government has yet to finalize the details for its maiden offering of green bonds worth at least $500 million. He pointed out that the uncertainties fueled by external factors, such as the impending US Fed hikes and Russia’s attack on Ukraine, prevent the plan from pushing through.
“The market is volatile. We are taking a close look at the issuance of our green bonds, which is in the pipeline,” Dominguez said.
“We have not yet made a final decision on that, but we are going to be ready as soon as market [conditions] improve or stabilize,” he added.
Last year, the country returned to the Japanese debt market, borrowing 55 billion yen through the sale of three-year samurai bonds with a coupon of zero percent.
Proceeds from that offering were used to increase the war chest in managing the pandemic, as the Philippines at that time reverted to lockdown amid the spread of the Delta variant.
Also in 2021, Dominguez said the government would auction its first-ever green bonds in line with the policy to deploy public and private funds in completing sustainable projects. The offering will also set into motion the use of the sustainable finance framework that the economic agencies crafted.
The finance chief said the government would continue to rely on the domestic market for its cash demands. According to the Bureau of the Treasury, local borrowings will account for more than 77 percent, or P1.91 trillion, of the P2.47 trillion in new debts to be incurred this year.
However, the Treasury has faced difficulties in borrowing even from the domestic market due to rising rates demanded by investors cautious of foreign risks.
The Treasury has raised just P22.172 billion against a program of P250 billion, with only four auctions left in March.