RDB issuance boosts government borrowings

MANILA, Philippines — The Marcos administration hiked its borrowings by 23 percent to P225 billion in October following the issuance of the first retail dollar bond (RDB) of the government.

Data from the Bureau of the Treasury showed that total borrowings in October reached P225.2 billion as compared to P182.43 billion in October 2022.

During the month, borrowings from local lenders surged by three-fold to P174.63 billion from P56.73 billion secured in the same period last year.

This came after the government borrowed P71.78 billion from RDBs. Last year, there was no issuance of the onshore bonds.

This was the first RDB issuance under the Marcos administration and the second for the Philippines.

The RDB offering was part of the government’s program to make securities available to retail investors, especially individuals.

RDBs are issued to diversify funding sources of the government, as well as promote financial literacy and inclusion among Filipinos.

Nonetheless, a little over 50 percent of the domestic borrowings at P90 billion still came from fixed rate Treasury bonds.

The government also borrowed the remaining P12.85 billion from short-term T-bills.

During the same month last year, the government borrowed more T-bonds at P108.11 billion, but it managed to have a net redemption of P51.38 billion in T-bills.

In terms of external debt, the Treasury slashed its borrowings by 60 percent to P50.57 billion from P125.7 billion from foreign sources during the month of October.

Almost 85 percent of the external financing at P42.51 billion was made up of program loans while the remaining P8.06 billion were from project loans.

For the 10-month period, borrowings slightly went down by 1.5 percent to P1.98 trillion from the P2.01 trillion sourced in January to October 2022.

As of end-October, domestic borrowings decreased by a percentage to P1.52 trillion while offshore financing slipped 12 percent to P456.31 billion.

This means that the government already used up 89 percent of the borrowing plan it crafted for the year which is at P2.21 trillion.

Next year, the Philippines will increase its borrowing program by a little over 10 percent to P2.46 trillion, still in favor of domestic creditors.

Sourcing from the domestic market is part of the administration’s prudent debt management strategy and its initiatives to further develop the domestic capital markets.