Gov’t seen to issue peso or dollar bonds in Q1

THE GOVERNMENT could borrow either from the local or the foreign market in the first quarter of 2024 as both US Treasury yields and PHP Bloomberg Service Valuation Reference Rates have come down.

“They could issue more of [the] longer tenors, they could do Sukuk, tokenized, and other foreign denominations and tap the local markets too,” Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said in a Viber message.

He added the government could look to raise around P3-5 billion or about $500 million to $1 billion for a bond offering. “It could be more,” he added.

The possibility of the Bureau of the Treasury (BTr) issuing Sukuk or tokenized bonds next year is high given the success of the respective maiden issuances last year, China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

The BTr raised $1 billion from the sale of 5.5-year Sukuk bonds last month. This was twice the benchmark size of at least $500 million and matched the target mentioned by Mr. Diokno in July.

The notes were given an Ijara and Wakala structure with a Commodity Murabaha aspect and were set a profit of 5.045%.

Fitch Ratings, Moody’s Investors Service and S&P Global Ratings rated the bonds “BBB,” “Baa2,” and “BBB+,” matching their ratings for Philippine sovereign debt.

Meanwhile, the government raised P15 billion from the first-ever sale of tokenized Treasury bonds (TTBs) in mid-November, higher than the target issue size of P10 billion.

The BTr priced the one-year tokenized bonds at a coupon rate of 6.5%.

Aside from Sukuk or tokenized bonds, the government will also have different borrowing instruments to choose from such as onshore dollar bonds or Premyo bonds as it has been diversifying its foreign funding sources, he added.

He added that government issuances are expected to pick up next year due to the 2024 national budget, which was recently approved by Congress.

“Overall, the National Government is projected to borrow around P2.5 trillion from local and foreign sources. The government will prioritize domestic issuances of Treasury bonds (T-bonds) and Treasury bills (T-bills) to raise more than P1.8 trillion,” he noted.

The BTr canceled its last T-bills and T-bond auctions on Dec. 11-12 after it completed its domestic funding requirements for the year.

This year, the Philippine government’s borrowing plan was set at P2.207 trillion, consisting of P1.654 trillion from domestic sources and P553.5 billion from foreign sources. — Aaron Michael C. Sy