Marcos admin raises $2 billion from offshore borrowing

MANILA, Philippines — The Marcos government was stung with high global interest rates after it raised $2 billion from the international debt market, marking the administration’s first foray into offshore commercial borrowing.

The Bureau of the Treasury said the Philippines raised $2 billion in its debut in the international debt market via a triple-tranche dollar issuance.

The government secured $500 million for its five-year tenor with a coupon of 5.17 percent, while it borrowed $750 million for a 10.5-year maturity at 5.6 percent.

Its 25-year sustainability bond fetched an average of 6.1 percent and raised another $750 million.

It should be noted that the government borrowed the amount at a significantly higher cost as compared to when it offered the same issuance seven months ago.

Last March, it raised a total of $2.25 billion for the same tenors, but only at interest of around 3.2 to 4.2 percent.

The cost of long-end US dollar borrowings of the country has so far increased by over three percentage points since the start of the year.

Such a cost is also moving closer to long-term peso borrowings at around 1.5 percentage points cheaper for US dollars.

Union Bank of the Philippines chief economist Ruben Carlo Asuncion said the latest foreign borrowing showed the government the realities it faces as global interest rates are rising fast.

But national treasurer Rosalia de Leon maintains that the transaction indicates the country’s readiness “to brave choppy waters in pursuit of excellent results.”

“We were able to deftly capture a good execution window amid a daunting volatile market environment to attain our financing objectives at favorable cost,” de Leon said.