Philippines eyes euro, dollar bond issuance

The government is looking to issue US dollar- or euro-denominated bonds in the first half of 2025, the Finance chief said.   

“[We’ve approved] a potential double bond — US dollar and/or euro,” Finance Secretary Ralph G. Recto told reporters on Tuesday.

He added the government will look to raise at least PHP 300 billion from the issuance, which is the benchmark size of foreign issuances.

The Philippines’ last dollar bond issuance was in August this year. It raised USD 2.5 billion from the issuance of triple-tranche, US dollar-denominated global bonds.

In September, National Treasurer Sharon P. Almanza said the National Government (NG) will no longer push through with a planned euro bond issuance this year.

The National Government last issued euro bonds in April 2021, raising euro 2.1 billion (PHP 122.4 billion) amid the coronavirus pandemic.

The government has USD 500 million yet to be raised from the international debt market this year from its USD 5-billion external borrowing plan.

Mr. Recto on Tuesday said the government is also planning to issue Sukuk and Samurai bonds next year.

“I think it’s an opportune time that the yen is depreciating so it’s favorable for us. If we borrow from them, they’re depreciating, you know. But more importantly, I think you want to be on the radar screen of investors from Japan,” he said.

The Philippines last issued Samurai bonds in April 2022, raising yen 70.1 billion.

Mr. Recto said there is also demand from Middle East investors.

“Because there’s an appetite from the Middle East. You want more people buying our bonds, our notes, and so on and so forth. If they’re willing to finance government operations, why not?” he added.

The government first issued Islamic debt in December 2023, raising USD 1 billion from the sale of 5.5-year dollar-denominated Sukuk bonds.

The government set its borrowing program at PHP 2.55 trillion for 2025, of which PHP 507.41 billion will come from gross external borrowings.

The government could benefit from tapping the foreign debt market next year as the US Federal Reserve’s further easing is expected to reduce borrowing costs, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

However, the benefits could be offset by a stronger dollar and higher US Treasury yields, Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said in a Viber message.

“Timing is key in the issuance as the greenback and the 10-year US Treasury yields continue to rise. A Trump presidency is supportive of the greenback and 10-year yields,” Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas likewise said in a Viber message.

Mr. Rivera added that demand for bond issuances from the Philippines could be dampened due to heightened global economic uncertainty brought by Mr. Trump’s proposed trade policies and potential tariffs on imports. — Aaron Michael C. Sy