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Marcos gov't borrows $2-B from investors in its first global bonds sale

Ramon Royandoyan - Philstar.com
Marcos gov't borrows $2-B from investors in its first global bonds sale
Under the Constitution, the government needs to secure the approval of the BSP first before it can contract or guarantee foreign loans. This is to promote the judicious use of the resources and ensure that external debt requirements are at manageable levels.
STAR / File

MANILA, Philippines — The Marcos Jr. administration said it scored boons in its first attempt to tap the global bond market despite persistent inflationary pressures that are pushing borrowing costs up.

The Philippine government borrowed $2 billion from investors following its return to the international capital markets for the third time this year, the Bureau of the Treasury reported Thursday. The US-dollar denominated bonds were sold in three tranches, with debt papers payable in five, 10.5 and 25 years.

The Treasury said the government was able to “successfully” raise fresh cash despite elevated inflation, which has prompted creditors at home and abroad to ask for higher interest rates to offset the impact of rising consumer prices on their investments. At the same time, a weakening peso against a rallying US dollar is making foreign debt servicing more expensive for the Philippine government.

According to the Treasury, interest charged for the five-year bonds, as measured by a coupon rate, stood at 5.170% while the longer-dated 10.5-year papers fetch a rate of 5.609%.

The coupon rate for the 25-year bonds, meanwhile, was at 5.950%, 45-basis point tighter than initial pricing guidance of 6.550%.

The government will use the proceeds from the sale of the five- and 10.5-year global bonds for “general purposes, including budgetary support,” the Treasury said.

The proceeds from the 25-year securities will be applied to finance or refinance assets under the government’s Sustainable Finance Framework, the Treasury added.

“The success of this transaction is an indication of the Philippines’ readiness to brave choppy waters in pursuit of excellent results,” National Treasurer Rosalia de Leon said in a statement.

GLOBAL BONDS

PHILIPPINE ECONOMY

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