DOF mulls foreign borrowings in 2014
Even as the local capital market remains very liquid, the national government is not ruling out the possibility of returning to overseas debt markets next year to provide offshore investors with fresh supply of Philippine notes.
Finance Secretary Cesar V. Purisima said in a roundtable discussion with reporters late Friday that the national government needs to maintain some presence in the overseas debt markets despite favorable domestic conditions to keep the country’s access to it.
Purisima, however, clarified that the fiscal authorities have not made any decisions on whether or not the country will pursue commercial borrowings in 2014 after a year of absence.
“The local market is still awash with liquidity so there is no need for us to go to foreign markets. But, one of our goals is to maintain market access and supply investors with fresh Philippine papers,” Purisima said.
As early as April this year, the Philippine government, one of the most aggressive sovereign borrowers in the region, shelved its entire foreign commercial borrowing programmed for 2013 as the state saw a much favorable opportunity in the domestic market.
Instead, the government shifted its programmed $2-billion offshore commercial borrowing into the domestic market, raising the domestic component in this year’s financing plan to almost 100 percent.
But National Treasurer Rosalia B. de Leon earlier said that the government plans to return to the foreign debt markets next year with an initial selling of $1 billion worth of notes.
De Leon explained the government needs “flexibility in terms of financing.”
In 2014, the Aquino administration earmarked $2.2 billion in foreign borrowings. Of that amount, $1.2 billion will be in the form of official development assistance (ODA) and the remaining balance will be in commercial borrowings.
De Leon said there was “strong appetite for government securities even in terms of tenor.”
“We will open the door in the early part of [next] year,” she said, adding that the planned borrowing will depend on market appetite and conditions.
Roughly 85 percent of its 2014 borrowings will be sourced locally, she said.